Oral Answers to Questions

HEALTH

The Secretary of State was asked—

Health Care (Durham)

Kevan Jones: If he will make a statement on the work of University hospital, Durham and the North Durham Health Care NHS trust.

John Hutton: North Durham Health Care NHS trust was formed on 1 April 1998. Since then, its income has grown by an average of 9 per cent. year on year. The trust met all its waiting list targets in 2000–01, and the new state-of-the-art University hospital of North Durham was completed on time and within budget.

Kevan Jones: Does my hon. Friend agree that the success of the North Durham Health Care NHS trust is due, in no small part, to the chairmanship of Mr. Kevin Earley? Does he accept that Mr. Earley's removal from the chairmanship without any local consultation has left the trust leaderless and does nothing to help deliver the good health care that we expect in North Durham?

John Hutton: I certainly agree that the trust has performed, not least in getting the new hospital built on time; I am sure that the chairman of the trust made a significant contribution to that. However, it was right to move responsibility for appointments to an independent appointments commission. The procedures have been approved by the Commissioner for Public Appointments. Today, the NHS Appointments Commission confirmed that there will be a new chairman of the trust, and an announcement will be made in the near future.

Gerry Steinberg: From his answer, my hon. Friend is obviously aware that Kevin Earley, who was chair of the trust, has been unceremoniously dumped after doing an excellent job in delivering the new hospital to us. My hon. Friend the Member for North Durham (Mr. Jones) has tabled questions to the Secretary of State asking who was invited to interview by the new NHS Appointments Commission, which organisations were consulted and why Kevin Earley was not reappointed. Every single question went unanswered. Was that because Mr. Earley crossed civil servants in the north-east of England and, disgracefully, was sacked as a result? Is that not an example of transparency—

Mr. Speaker: Order.

John Hutton: I am sorry, I cannot explain why those questions were not answered, but I shall certainly look into it. However, that has nothing whatever to do with the points that my hon. Friend made. We decided to set up the NHS Appointments Commission; that was the right thing to do. As I have made clear to the House, the commission's appointments procedures have been approved by the Commissioner for Public Appointments. How the NHS Appointments Commission goes about its task is a matter for it to decide, but I am quite sure that it did the right thing on this occasion.

Nurses

Bill Rammell: If he will make a statement on progress in meeting targets for the recruitment of nurses under the NHS plan.

Mike Hancock: What plans he has to improve the retention of nursing staff.

Simon Burns: Hurry up.

Alan Milburn: I am being as quick as I can.
	In the first year following publication of the NHS plan, the number of nurses employed in the NHS increased by 6,310; the number of qualified GPs and consultants increased by 1,230. By 2005, we expect 20,000 more nurses and 10,000 more doctors to be working in the NHS.

Bill Rammell: I thank the Secretary of State for his response. Does he agree that having 20,000 extra nurses under the NHS plan is critical to the future health and well-being of the NHS and is in stark contrast to the previous Government's cuts in the nurse training programme? Does he also agree that high nursing costs are one of the biggest deterrents affecting nurse recruitment in the south of England? While the additional £1,000 a year cost-of-living allowance in parts of the south-east is welcome, it is inexplicable that it has not extended as far as Essex. I strongly urge my right hon. Friend to get his officials to look at that issue again.

Andrew MacKinlay: Or else.

Alan Milburn: I am being barracked from the right and the left. As for Essex, my hon. Friend the Member for Harlow (Mr. Rammell) will be aware that we introduced cost-of-living allowances this year for the first time. By definition, there is an element of rough justice about that; I appreciate that, and accept that there is a pressing case for other areas to be included. We are keeping the issue under active review and want to be able to extend the cost-of-living increases both to parts of the country where the labour market pressures are greatest and to professional groups, apart from nurses and midwives, where recruitment is difficult.
	In the more medium term, we need a better formula for distributing NHS resources so that we can take account of the fact that labour markets in the south-east, for example, are different from those in my part of the world. By and large, there are areas of full employment in the south-east. I hope that we will eventually have full employment in the north-east too. As for the number of training places and commissions, my hon. Friend is right; we still have nurse shortages today precisely because the number of training places were cut in the mid-1990s by about 20 per cent.

Mike Hancock: Will the Secretary of State consider giving those returning to nursing greater help in meeting their retraining costs? Will he also consider a method of speeding up the re-registration of those who have returned to nursing, and will he comment on the fact that fewer than 50 per cent. of nurses working in the health service would be prepared to recommend nursing as a career with long-term prospects?

Alan Milburn: Since April 1999, more than 9,000 nurses who had left the national health service have returned to it. They have been attracted back to the NHS because we have made it more worth while for them to come back. We have increased their pay, the staging of pay that used to occur regularly is no longer occurring, and we are giving them, I hope, decent and fair pay rises. We want that to be extended in the future and, as the hon. Gentleman knows, we are renegotiating the way in which pay is decided in the NHS, to make sure that it is fairer and more transparent for all members of staff, but particularly for nurses.
	On nursing as an attractive career, it is important that those working in the nursing profession, those leading the nursing profession and all Members of the House continue to advocate the case for nursing. Nursing in the NHS continues to be a good career, as is evidenced by the fact that the number of applications for nurse degree courses over the past three years has risen by 86 per cent.

David Hinchliffe: My right hon. Friend will be aware of the evidence that shows that the private health care sector recruits its staff almost entirely from the national health service. In respect of the concordats with the private sector at local level, what steps are the Government taking to ensure that the increased use of the private sector does not have a detrimental effect on the local NHS?

Alan Milburn: That is an important issue. One part of our health care system cannot benefit at the expense of another. We are making increased use of spare private sector capacity—for example, in private hospitals—so that we are able to expand the care available to NHS patients. That means that we can get more NHS patients treated more quickly. It is a matter of record that many of the private sector providers—the BUPAs of the world—employ their own nursing staff. There are issues that we will need to keep under review concerning the contribution to costs that those private sector providers make.

Marion Roe: Is the Secretary of State aware that many nurses are becoming increasingly unhappy about their conditions of work, particularly the fact that they are unable to give the time and attention to patients that they would wish? How many nurses fail their training course, and how many nurses do not go into the nursing profession, having completed the training course?

Alan Milburn: The attrition rate, to which the hon. Lady is referring, is 10 to 11 per cent. of the number who apply for a nurse training course leading to a diploma or a degree, but the rate is falling. It is important that in the selection process we make sure that the candidates selected are appropriate for the job. The number of nurse training places, which was cut under the Administration whom the hon. Lady supported, is rising rapidly. That is welcome, but perhaps even more importantly, as I noted earlier, the number of people who want to go into nursing and who are applying for a nurse degree or a diploma course, is rising rapidly. I hope that that is a good sign of progress. It is one of many signs of progress that people will see in the NHS, and it is worth bearing in mind that there are currently 17,000 more nurses working in the NHS than when the Government took office.

Fiona Mactaggart: I am pleased to hear what my right hon. Friend says about nurse training, but does he agree that in constituencies such as mine in the south-east of England, where there is a high level of employment, we need to be rather more imaginative about enabling people to get into the nursing profession—for example, by enabling those who have been hospital auxiliaries to do nurse training? What plans does he have to make nurse training more flexible and available to people who are currently employed in the health service?

Alan Milburn: As my hon. Friend is aware, we have already taken steps in that regard. It is one of the absurdities of the way in which we have traditionally employed people in the NHS that staff are employed in ghettos, or in silos—nurses here, doctors there, health visitors over there, health care assistants over here. We are trying to develop the concept of a skills escalator, so that people can develop skills through their career and jump off into different careers as they develop professionally. We have certainly made it easier for health care assistants to become nurses. We needed to make it easier for nurses to develop their careers, too.
	There is no simple answer to the problem of nurse shortages. An expansion in the number of nurse training places is obviously key to that and fair pay is important, but another crucial element is the so-called quality of life issue, which includes ensuring that nurses have flexible working conditions that suit them so that they can better balance their family and working lives, and that more child care is made available, not just in hospitals but in primary and community services too. There is real progress to report on all those aspects of improving the attraction of nursing as a career. Provided that we continue to invest in the NHS and, as my hon. Friend advocates, to make the reforms, we can look forward to an even bigger expansion in the number of nurses working in the NHS during the next few years than we have seen in the past few years.

Simon Burns: Will the Secretary of State clear up a discrepancy on the targets? The NHS plan claims that there will be 20,000 more nurses by 2004, but in Labour's manifesto the year was 2005. On which target is the Government's policy based, what is the baseline for the target, are the nurse figures based on targets for whole-time equivalents, and how can they be achieved when the Department of Health figures show that there are 9,400 nurse vacancies in Britain, 2,960 of which are in London alone?

Alan Milburn: The hon. Gentleman might have said that the number of nurse vacancies is falling, not rising, that the number of nurse training places is rising, not falling, and that the number of nurses is rising, not falling. With regard to the relationship of the NHS plan to the manifesto, the hon. Gentleman might have noticed that the general election came after the NHS plan was published. The NHS plan was based on a baseline of 1999 figures up to 2004. The manifesto, on which we fought the election, was based on a baseline of 2000 up to 2005. [Interruption.] There is no particular revelation there. I know that the hon. Member for West Chelmsford (Mr. Burns) is from Essex, but even for a man from Essex he is getting terribly excited. [Interruption.] I am assured that men from Essex do get excited. [Interruption.] I have brought my hon. Friend the Member for Thurrock (Andrew Mackinlay) back into the Chamber. I always think that it is nice to make people happy, which is a rare occurrence in my job.
	We can be confident of making good progress towards the targets precisely because of the changes that we have introduced. Nurses would not be working under the sort of pressure that they are working under today if the hon. Gentleman, among others, had done the right thing when he was a Minister in the Department of Health, and increased the number of training places rather than cutting them.

Smoking

John McFall: If he will make a statement on progress on smoking cessation services.

Hazel Blears: The national health service smoking cessation services are making excellent progress. In 2000-01, 61,500 smokers successfully quit.

John McFall: What will be the funding for the next financial year, and is it in place? Does my hon. Friend agree that it is shameful that Parliament has not grasped the nettle and introduced a ban on tobacco advertising? When will the Government face up to their responsibilities, so that we stop all people, particularly young people, starting to smoke in the first place, and thereby remove the need for such programmes?

Hazel Blears: My hon. Friend is right that smoking cessation is a top priority for the Government. Smoking causes 120,000 deaths a year and costs the NHS £1.7 billion. With regard to future funding, we are asking primary care groups and trusts to plan for the needs of their communities because the services are incredibly successful. As I have said, 61,500 smokers quit last year, and the target for this year is for 40,000 smokers to quit. Nearly 30,000 quit in the first quarter, so the services are successful and we must ensure that they continue in the future. It is right that we try to prevent people from smoking in the first place. We have a manifesto commitment to bring back the Tobacco Advertising and Promotion Bill in the lifetime of this Parliament. If it had not been frustrated by the Opposition, we might be further on than we are now.

David Tredinnick: Will the hon. Lady confirm that it is not only patches that help people to give up smoking, but that there is a range of other alternatives, including hypnotherapy, reflexology, cranial-osteopathy and shiatsu? Is she aware that shiatsu is now available in the House of Commons Gym and that it can help with the cessation of smoking? Does she think that it is right that, although Members of Parliament can benefit from shiatsu, it is not available on the health service?

Hazel Blears: As usual, the hon. Gentleman is creative and imaginative, and suggests wonderful solutions. I agree that there is a range of therapies that can help people to give up smoking, and we should be exploring whatever works in helping people to do that. In terms of access to hands-on therapies, I am not entirely sure whether Members of Parliament should be taking that route. None the less, I believe that we should explore whatever therapies work for people.

Kevin Barron: Does my hon. Friend agree that when smoking cessation services are part of programmes carried out in health action zones, such as the Thurcroft healthy hearts programme in my constituency, they, too, should be evaluated? If they are providing what we believe to be major services for improving health in our communities, they should be funded in years to come.

Hazel Blears: Many of the health action zones have done marvellous work in this field. For example, many of them are training young people to act as peer mentors. Thus, young people are persuading other young people why it is good to give up smoking and not to take it up in the first place. That is far more effective than older people telling younger ones what to do. Health action zones have been incredibly innovative in those areas. That is why we are asking primary care groups and primary care trusts to plan their commissioning for the long term, so that these excellent examples of good practice can be put into the mainstream of the health service.

Residential Care Standards

Andrew Murrison: If he will make a statement on how the national care standards for residential care homes will reflect the treatment needs of those with drug and alcohol problems.

Jacqui Smith: The standards will promote better quality care and help to prevent abuse by grounding practice in the principles of dignity, choice, privacy and respect. They will reflect the treatment needs of those with drug and alcohol problems by ensuring that their assessed and changing needs and personal goals are reflected in their individual plans.

Andrew Murrison: I thank the Minister for that response. I welcome evidence from yesterday's Adjournment debate that the Government are softening their thoughts on the regulations. However, they have confused the needs of short-stay patients in treatment with those of residents whose care homes constitute their homes. There is a big difference. Does she agree that free access to mail and visitors would give freer access to illicit substances and that lockable bedrooms would increase the likelihood of deliberate self-harm by residents? Does she also agree that—

Mr. Speaker: Order. The question is far too long, and the hon. Gentleman is reading.

Jacqui Smith: The hon. Gentleman's first comment was right. Although this may be difficult for Opposition Members to recognise, the consultation was a real one. We have listened and we will respond to the concerns that were expressed. The particular concern that he raised related to the treatment regimes that will be allowed under the standards. It is important to emphasise that we realise that, sometimes, the overriding need is to ensure that people get the care and treatment that they need in a safe and secure environment. That is why the standards, at the request of representatives from the drug treatment world, include standard 2.7, which recognises specifically that there will be times when freedom and choice might need to be restricted. It asks only that that be discussed and agreed with prospective service users as part of their initial assessment.

Brian Iddon: I am grateful for my hon. Friend's response. Will she please note that the European Association for the Treatment of Addiction, Drugscope and Release, among others, have estimated that, if the care standards are adopted and unit costs are driven up, more than 50 per cent. of the care beds are likely to be lost in this sector?

Jacqui Smith: I think that my hon. Friend is referring particularly to concerns about multi-occupancy rooms. The care standards will put in place the good standards that users of services have every right to expect, and ensure that they are provided and regulated uniformly across the country. When we consulted on multi- occupancy rooms, strong views were expressed by service users about the lack of privacy and dignity involved in sharing. I do not think that many hon. Members would be happy to share their bedroom with someone whom they had not invited into it, and we need to bear in mind the principle behind that when determining the standards.
	It is also important, however, that we ensure that the standards are based on evidence of the outcomes for service users. For that reason, we are seriously considering the standards relating to multi-occupancy rooms and, more importantly, we shall also consider whether and how it would be helpful to carry out new research into links between the occupancy of rooms and the sort of outcomes that service users achieve.

Liam Fox: How can the House have confidence in the Department of Health's awareness of the suicide risks and the potential for continuing drug and alcohol abuse among those patients when the draft standards stipulate that
	"Staff enter service users'"— that means patients—
	"bedrooms . . . only with the individual's permission . . . Service users have a key to their own bedroom . . . which can be locked from the inside . . . Service users choose when to be alone or in company, and when not to join an activity"—
	and that
	"Service users' own rooms include: . . . lockable storage space"?
	Who writes this stuff? Have the draft regulations been approved by any of the Ministers, or have they simply been written by advisers who seem to have no understanding or experience of this sort of patient?

Jacqui Smith: The hon. Gentleman obviously wrote and decided to deliver that question before he had listened to my previous responses. On his point about consultation, the standards were drafted and considered by experts within and outside the Department. They were subject to consultation meetings involving users, at which it is fair to say that users and providers expressed different views about them. This is a real consultation, and we are listening. I have already outlined, in relation to standard 2.7, how some of the concerns that he has mentioned might be overcome, but we will continue to listen and respond to people's concerns. When he sees the final standards, he will recognise that this is a Government who talk, but who also listen and respond to concerns.

Liam Fox: The last time that the Government promised us consultation on similar regulations was in relation to care homes in general. The Minister might remember that, during those debates, we predicted that the result of their botched approach would be the loss of a large number of care home beds, and bed blocking throughout the national health service. Does she understand the anger of those who now see 15 per cent. of beds blocked in Birmingham, 17 per cent. blocked in Buckinghamshire and 18 per cent. blocked in Brent? How can anyone have confidence in a Government whose incompetence means that, nowadays, people have to queue up not only to get into hospital but to get out?

Jacqui Smith: People will have confidence in a Government who put the needs of the users of care homes at the centre of their policy. The hon. Gentleman is restating his claim that 50,000 care home places have been lost. That is wrong, as we have already pointed out to him. We accept, however, that there is a problem with capacity in care homes. That is why my right hon. Friend the Secretary of State set up the strategic commissioning group to consider how we can improve commissioning at local level in partnership with the independent sector. That is also why, on 9 October, my right hon. Friend announced a radical cash for change programme worth £300 million over this year and next, to tackle the problem of bed blocking. Such money was never promised by the Conservatives, and such measures would never have been delivered, had they won the last election.

Bob Blizzard: Is not the move to national standards and national inspection of care homes meant to take that responsibility from local authorities to achieve greater consistency? Does my hon. Friend share my concern that some local authorities appear to be aiming to continue inspection under the guise of contract monitoring? Is not such duplication a waste of resources and a nightmare for care home owners? Most of those I know welcome national standards.

Jacqui Smith: My hon. Friend makes an important point, and I know that he has taken a close interest in the issue. He is right that the national approach to care standards is beneficial because there will be consistency across the country in regulation and inspection. The National Care Standards Commission, which comes into operation from next April, will ensure that that consistency exists while recognising the flexibility necessary to ensure that good provision continues.
	Local authorities, given the extra investment that this Government have provided for them, should concentrate on how they work constructively with local independent sector providers and other partners to ensure that we maintain and expand capacity for older people and others in need of long-term care. That is the priority that the Government set in the agreement that we published on 9 October, which is backed up with significant extra investment.

Digital Hearing Aids

Charles Hendry: If he will make a statement on the availability of digital hearing aids through the NHS.

Don Foster: What are his Department's plans for the funding of digital hearing aids during 2002–03.

Jacqui Smith: National health service trusts may provide digital hearing aids for patients if clinically appropriate. Digital hearing aids are being provided by 20 NHS trusts in the modernising NHS hearing aid services project. Further decisions on digital hearing aid provision will be made in the light of the research evaluation of the project.

Charles Hendry: I am grateful to the Minister, but is she aware that millions of people with hearing difficulties will consider that reply to be deeply inadequate and wholly complacent? Is not it unacceptable that, in the 21st century, hearing aids in the United Kingdom continue to be based on outdated 1970s technology, whereas digital hearing aids are increasingly common in other parts of the world? Is not it time for the Government to stop posturing, push ahead faster with the trials and, particularly in the coming year, allocate the funds that are desperately needed to tackle the problem?

Jacqui Smith: I am willing to take a lesson on posturing from Conservative Members, if necessary. The Government have invested practically in the whole process, which is necessary not just to give people digital hearing aids, but to provide them in a modernised fashion in the health service. In the pilot areas, people are being assessed in terms of their needs. They are fitted with digital hearing aids, which also involves the necessity for computer programming and skilled input, and then assessed to ensure that the hearing aids are appropriate.
	I hope that everybody in the Chamber believes that we have a responsibility in the NHS to provide not only the equipment, but the process, the support and the skilled staff to ensure that that is done effectively. That is why we are using the pilot phases to ensure that we can roll out modernised hearing aid services provision across the NHS in a way that benefits patients to the maximum.

Don Foster: The Minister will be aware that the audiology unit at Bath's Royal United hospital is one of the first-wave pilot schemes. Will she give it an absolute assurance that it will receive continued funding for the scheme from April next year? When, precisely, will that announcement be made? Is she aware that, even in the first-wave project areas, there is a difficulty in that some patients are given the new digital hearing aids and others the old aids?
	There is a solution to that problem. Will the Minister at least agree that it is inappropriate in pilot areas such as west Dorset for audiologists to be advised:
	"It is also very helpful if you can downplay the benefits of digital versus standard NHS hearing aids."?
	Will she join me in deprecating that advice?

Jacqui Smith: I can say that, in the near future and subject to evaluation, we will make statements on the roll out of digital hearing aids and their continued provision in areas where that is clearly successful. I agree with the hon. Gentleman that it is important to ensure that we have strong evidence about the effectiveness of digital hearing aids so that, across the NHS, we provide not only the technology but the most appropriate procedure for patients. That will ensure that situations such as the one to which he referred no longer exist.

Peter Pike: As the user of a hearing aid due to industrial deafness, may I point out to my hon. Friend that the current NHS hearing aids give people all the noises that they do not want to hear and make it difficult to hear those who are talking? Something must be done to ensure that deaf people can hear when people are speaking to them.

Jacqui Smith: I am not quite sure what sounds my hon. Friend does not want to hear in Chamber!
	Part of our evaluation of the success of digital hearing aids will refer to the modernisation of the whole process—fitting, assessing and follow-up. That is why it is important both to evaluate technical success and to ensure that we can put in place the processes that will enable digital hearing aids to be fitted as part of the service that we expect for NHS patients.

David Chaytor: May I tell the Minister about the excellent work done by audiology staff at Fairfield general hospital in my constituency? The issue that concerns them, in addition to the supply of digital hearing aids, is the screening of young babies for deafness. Does she have any plans to introduce pilot schemes for that kind of screening, which will bring enormous advantages to children in my constituency?

Jacqui Smith: My hon. Friend is right: the early screening of babies enables problems to be identified and better joint working to be undertaken. That is why screening the hearing of the newborn, which is done before they are discharged from hospital, or as soon as possible thereafter, is being piloted by 22 health authorities during 2001-02. Over the next three to four years, we intend to implement the scheme progressively across the NHS in England using the lessons that have been learned. It is important to recognise, however, that the programme involves screening rather than provision. We must therefore also ensure that we facilitate and improve joint working between the NHS, the education service and social services so that those children who are identified as having hearing difficulties are followed up and cared for. They will be identified earlier through the screening process, and we then have a responsibility to ensure that they get the treatment that they deserve from all those agencies.

Martin Smyth: The Minister can be thankful that she does not understand about shutting out unwanted noises from hearing aids. I have benefited from a digital hearing aid, and I trust that the NHS experiment will start to be applied faster than at present. If the Minister is not prepared to take lessons from the previous Government's experience of postcode rationing, I fear that certain areas will not benefit from the digital roll out.

Jacqui Smith: On the speed of delivery, the modernised hearing aids services project was announced a little over a year ago by my right hon. Friend the Minister of State. Twenty NHS trusts now routinely fit digital hearing aids. It is from that experience that I shall take lessons, and make sure that we roll out the programme in the most effective way. By the end of October, 13,278 digital hearing aids had been fitted and 16,178 people had been assessed. By the end of March, we expect that more than 18,000 people will have digital hearing aids on the NHS for the first time.

Tim Loughton: Last week, in a speech characterised by such soundbites as "The modernised patient journey" and
	"The patient, not the hearing aid, is at the heart of the fitting process"—[Official Report, Westminster Hall, 7 November 2001; Vol. 374, c. 132WH.]—
	well, that is a relief—the Minister claimed credit, as she has again, for the 13,270 digital hearing aids fitted by the 20 first-wave trusts. Now, there is widespread confusion about the Government's commitment to continue funding that first wave with up to £25 million by or in 2003–04, let alone to roll out provision across the whole country. When will the Government finally acknowledge what we all know—that digital hearing aids work and clearly bring enormous benefits to people with hearing difficulties—and give a proper commitment to provide them across the country as soon as possible to the 2 million people who would benefit from them?

Jacqui Smith: Conservative Members are high on commitments and a bit low on the practical details of how to meet them. My concern as a Minister is to ensure that patients receive not only the hearing aid, but the necessary assessment and fitting, conducted by a skilled work force. That is what patients of the NHS deserve. That is why we will evaluate the results of the pilots that we set up. We will announce how we will roll out the programme in the near future.

John Cryer: I appreciate what my hon. Friend says, but is she aware that there is a queue a mile long in my constituency for digital hearing aids because of their technological advantages over traditional ones, and that on 6 June last year my right hon. Friend the Minister of State made the plea that that technology be introduced into the NHS as quickly as possible? Can we introduce it more rapidly?

Jacqui Smith: We want that technology to be introduced into the NHS as quickly as possible, but in a manner that provides support for patients, assesses them properly and ensures that the necessary computer and related equipment is available and that skilled staff are available to give the sort of service that people expect from the NHS. That is why it is right that we get it right. I assure hon. Members that we will look carefully at the results of the evaluation of our pilots so that we can use that information to roll out the benefits of technology across the NHS as quickly and effectively as we can.

NHS Patients (Overseas Hospitals)

Graham Brady: If he will make a statement on sending NHS patients for treatment in overseas hospitals.

Alan Milburn: Following rulings of the European Court of Justice, I announced in August that NHS health authorities and trusts could commission treatment for their patients overseas. Three areas in southern England are working through the legal and practical issues involved, with the aim of offering, by the end of the year, treatment abroad to those patients who want it. I shall publish guidance for the NHS based on the experience in those three sites.

Graham Brady: I am grateful to the Secretary of State for his response. He will know that in the Salford and Trafford health authority, the proportion of patients waiting more than a year for NHS treatment has doubled compared with four years ago. In that situation, he must know that his announcements have raised the expectations of many people who are waiting for treatment, sometimes in severe pain. When will he bring forward clear guidelines that will say under which circumstances and criteria people will be entitled to treatment overseas?

Alan Milburn: I thought that I had just set that out.

Graham Brady: When?

Alan Milburn: I did say when. Three sites are currently working through the issues because, as the hon. Gentleman will be aware, we want to get this right. Patients who want overseas treatment will be able to go abroad—I repeat: patients who want that; there should be no question of sending patients abroad against their wishes. Not only will such an alternative be offered according to clinical need and a proper assessment of the patient's need, but that person will have to want to go abroad for treatment.
	It would be a disaster to send patients abroad and to find, for example, that the taxpayer was not getting good value for money and, more important, the patient was not receiving the highest standards of care. That is why we are working through the three pilot sites. I hope that we will be able to make the offer to patients by the end of this year, with a view to issuing guidance early in the new year to the NHS based on those patients' experiences. I think that that will be helpful.
	Incidentally, on the numbers who are liable to take advantage of such an option, my view is—other hon. Members may have a different opinion—that what most patients want, as the hon. Gentleman has rightly said, is the choice of good-quality local care based in their local hospital, and falling waiting times. Indeed, in the past year, the number of in-patients waiting more than a year for treatment has come down by 13 per cent.

Gwyneth Dunwoody: Is my right hon. Friend aware that one of the best ways of making a clinical assessment is to talk to and listen to the patient? Will he give an undertaking that no one will be offered care in a country where there are not sufficient doctors and nurses capable of performing that task? Will he also ensure that anyone receiving treatment abroad has a clear pattern of after-care, should that be needed, under post-operative treatment?

Alan Milburn: My hon. Friend makes a very good and telling point. It would be extremely foolish, as the hon. Member for Altrincham and Sale, West (Mr. Brady) seemed to be suggesting, to rush into such arrangements. We have to get them right to ensure not only that patients are fit and well enough to go abroad to be treated, but that they receive the appropriate support and after-care that they need in the country of treatment and once they return home. Those issues have to be worked through properly.
	I give my hon. Friend the assurance that she seeks on her first point. As she is aware, spare capacity is available in Germany, France and elsewhere, and we are looking to those countries so that we can treat what I believe is a minority of NHS patients, but that choice should be available to as many NHS patients as possible.

Peter Bottomley: Does the Secretary of State recognise that there are plenty of patients in West Sussex and west Surrey—where one in 10 of those awaiting in-patient treatment are waiting more than one year—who would welcome not only the possibility of going abroad, but the opportunity to be treated in the Durham health authority or by his own authority, where the number of those waiting more than one year is almost nil? Such postcode delays could be sorted out without worrying about languages or going abroad. What is he going to do about that, and when will he do it?

Alan Milburn: That is a perfectly reasonable suggestion and, as the hon. Gentleman is probably aware, we are exploring ways in which we can make more choice available to patients. He is also quite right that waiting times vary in different parts of the country; even in London, the average in-patient waiting time varies from seven weeks in one hospital to 23 weeks in another. Very often, patients are locked into a contract with their local hospital that the local primary care group or primary care trust has negotiated. Although GPs have the right to refer to other areas, it is important that they should exercise that right in a more proactive manner. We are investigating whether it is possible to extend more choice to patients, precisely to enable them to take advantage of the shorter waiting times available in some hospitals.
	On travel, the hon. Gentleman will be aware that, certainly in constituencies in southern England, geographical proximity is an issue. It makes sense for patients in Kent, for example, to travel to northern France rather than northern England. Although I know that geography is not necessarily the hon. Gentleman's strong point, I should have thought that even he would be able to distinguish his Arras from his Elmet. For the avoidance of doubt, one place is in northern France and the other is in west Yorkshire.

Caroline Flint: I welcome my right hon. Friend's proposals to seek any opportunity to ensure that people in this country receive the treatment that they deserve. We will have to use whatever stop-gaps are necessary to deal with the 20 years of decline. In examining how the system might operate, will he consider issues such as travel to the destination, necessary support care during travel and especially the cost of travel? I should not like people on lower incomes to feel that they could not take advantage of the system because they might have to bear the burden of travel costs.

Alan Milburn: I strongly agree with my hon. Friend. As she is aware, the question asked by the hon. Member for Altrincham and Sale, West raises difficult and complex issues. The NHS already operates a scheme for patients, and particularly for low-income families, who need to travel to hospital, whether it is a local or more distant one. It seems obvious that we have to be able to extend the benefits of that type of scheme to those who might be travelling abroad for treatment. We have to assess that issue properly. Crucially, we also have to ensure that not only patients going abroad for treatment but their carers and families are offered appropriate support. We are seeking to address precisely those issues in the three pilot areas. Based on that experience, we shall be able to issue the appropriate guidance to the national health service.

Evan Harris: If the initiative or stop-gap is to be taken seriously, it is the Government and not guinea pig patients on the south coast who must answer the questions. If patients have to pay for their own and their families' travel, where will be the fairness for those who cannot afford to pay? If the health authority or PCT pays for travel, how will value for money be delivered?
	If things go wrong, whom will the patient be able to sue, or—a more appropriate question for the Secretary of State—whom will the Government blame? How can informed consent be given and received in a foreign language? How will the Government feel if overseas trusts and providers advertise for British nurses and doctors to go and do the work?
	Is not the very fact that we are even considering this an indictment of the Secretary of State's management of the health service, and a sign that he has failed to deliver?

Alan Milburn: The hon. Gentleman began by asking good questions—precisely those to which we seek answers. Believe it or not, it is not easy. I know that the hon. Gentleman thinks that it is easy, and that a magic wand can be waved to solve every problem in the national health service; but this is not the Harry Potter appreciation society. Difficult decisions are involved. Perhaps at some point even the Liberal Democrats will have to make a difficult decision.

Simon Burns: Oh, no!

Alan Milburn: Well, let us hope not.
	Issues of standards, negligence and informed consent are precisely the issues that must be worked out. With regard to standards, we are exploring whether it would be possible to accredit certain overseas care providers, perhaps with the involvement of the Commission for Health Improvement as the independent inspectorate of the NHS. As for negligence, complex legal issues need to be considered. It is right for us to do that in conjunction with primary care trusts, which, after all, will be the fulcrum of the health service that we want.
	The hon. Gentleman is right about the difficulties involving languages and informed consent. We will have to provide not just support enabling patients—and their carers and families—to travel, but language support, if the system is to offer genuine choices.
	The hon. Gentleman made a wider point about this being, somehow or other, all the Government's fault. He must realise that, as we said a year or more ago in the NHS plan, turning around the NHS will mean a long hard struggle. He knows as well as I do that the service suffered decades of neglect and underinvestment. We are putting that right, and we will continue to do so, because we have put the money in.

District Nurses

Helen Jones: What plans he has for involving district nurses in profiling the health needs of their community.

John Hutton: District nurses play an important role in profiling the needs of health communities, through their knowledge of local communities and also through their work with individual patients. They will support primary care trusts as part of their responsibility for preparing health improvement plans from 2002. They are also eligible to serve as members of the professional executive committee of primary care trusts. The process for their selection is determined by local nursing colleagues.

Helen Jones: Does my right hon. Friend accept that, as well as playing a major role in improving people's health—allowing them to be maintained in their own homes, and avoiding unnecessary hospital admissions—district nurses, precisely because they work in the community, often have a better idea of its health needs than people sitting in offices elsewhere? Will he ensure not just that district nurses are eligible for involvement in PCTs, but that PCTs make a real effort to consult them when drawing up health improvement programmes and trying to improve primary care? These are the people with a real knowledge of their local communities.

John Hutton: I strongly agree. District nurses do a brilliant job, and will have an increasingly important role to play in the pattern of NHS services that we want to be delivered in future. I certainly want all PCTs to consult fully, and to involve district nurses in the development of their local strategies. We aim to devolve more and more responsibility and power to the front line of the NHS, and I do not think anyone is closer to the front line than district nurses.

Teddy Taylor: Would the Minister be willing to consult the district nurses of Southend-on-Sea, where, with their encouragement, the John Grooms establishment for severely disabled people carried out a massive, costly improvement to provide separate residential units? It was then hammered by separate rating demands, which increased its rates by 300 per cent. The arrangement has only just started, although I understand that it has now been applied to another establishment in Wells, and will also be operated elsewhere. Will the Government review the law to ensure that homes providing care facilities do not receive separate rating demands? This is a new situation, and the Minister's help would be greatly appreciated.

John Hutton: I am not aware of the situation in Southend, and I am concerned about what the hon. Gentleman has said. If he is prepared to write to me about these matters, I shall take certainly them up with my colleagues in Government.

Schizophrenia

Liz Blackman: When he expects the National Institute for Clinical Excellence to publish its recommendations on the prescribing of atypical anti-psychotic medicines for schizophrenia.

Jacqui Smith: We anticipate that the National Institute for Clinical Excellence will publish guidance on atypical anti-psychotic drugs in March 2002, provided that there are no appeals against the draft guidance.

Liz Blackman: I thank my hon. Friend for that reply, and I welcome the fact that NICE is appraising this class of drugs at the moment. I hope that there is no slippage in that programme. Is my hon. Friend aware that, although the traditional anti-psychotic drugs used at present on patients suffering from schizophrenia are useful, they also have some worrying long-term effects? Those effects include irreversible involuntary facial and body movements, which have long-term consequences for patients' employability and care needs.

Jacqui Smith: My hon. Friend makes an important point about the consequences of side effects on the wider lives of people suffering from schizophrenia, and I assure her that the NICE appraisal will look at the side effects of both traditional and atypical anti-psychotic drugs. It is important that a wide range of stakeholders—including users, carers, professionals and industry representatives—should be consulted and provide evidence to NICE.
	The appraisal will contribute to the on-going development of the clinical guideline on the management of schizophrenia, which is due for publication by the end of 2002. In that way we will be able to ensure that people with schizophrenia receive the very best and most appropriate care on the NHS across the whole range of treatment options, including treatment with drugs.

Michael Fabricant: Will the Minister confirm the general point that drugs licensed in the United Kingdom—including the atypical anti-psychotic drugs and the anti-TNF drugs for rheumatoid arthritis currently under consideration by NICE—can still be prescribed and funded by local health authorities? Will funds be made available to local health authorities to enable them to prescribe the drugs permitted or encouraged by NICE?

Jacqui Smith: We have made it clear that local health authorities should continue with their prescribing activities, but the problem highlighted by the hon. Gentleman is the reason that we have introduced NICE. NICE is a key component in ensuring that there is a common-sense way to end postcode prescribing: without it, the mess of variable access to treatment under different local policies would have continued. Where NICE has laid down guidelines already, rapid progress has been made towards giving people access to treatments on the NHS.

Oliver Heald: The Minister will be aware of the widespread concern in the House that these modern medicines should be made available to patients, and she will have seen the reports from the Zito trust and heard the representations from the National Schizophrenia Federation, MIND and other bodies. Will the Minister say whether NICE has already reached its provisional findings in relation to those medicines? If so, will she insist that they be published? That would give those of us who want to argue and make further representations a chance to do so?
	Finally, will she confirm that, if NICE finds against the medicines on the grounds of affordability, it will still be possible for the Government to consider the matter again, as happened with beta interferon? If that is not going to be possible, will she say why?

Jacqui Smith: As I said earlier, it is right that NICE should undertake the detailed analysis and consultation with stakeholders that is already under way. Provisional appraisal decisions are made available to the consultees, so that there can be continuing input into the decisions being made by NICE. Having set up an independent way of determining both the cost and the clinical effectiveness of drugs, I do not believe that it is right for Ministers to intervene in the approach that NICE is taking, but I can assure the hon. Gentleman that—as I pointed out earlier—the evidence of the effectiveness of NICE is that it has brought into the NHS, for the benefit of NHS patients, many treatments that were previously available only on the basis of a postcode and random prescribing process.

Points of Order

Liam Fox: On a point of order, Mr. Speaker. I have given previous notice of this matter. Under the guidelines published by the Cabinet Office in July 2000, Departments are required to disclose sponsorship amounts of more than £5,000 in the departmental annual reports. This year, the Department of Health disclosed that, from various sponsors, it had received £500,000 for the public consultation on the NHS plan. In response to a parliamentary question this week, the Minister of State, Department of Health, the right hon. Member for Barrow and Furness (Mr. Hutton), said:
	"The Department funded the NHS national plan consultation leaflet and the public consultation to inform the NHS plan. There were no sponsors involved."—[Official Report, 6 November 2001; Vol. 374, c. 229W.]
	Mr. Speaker, those two things cannot be right. On which occasion were we misled?

Mr. Speaker: The hon. Gentleman has put the matter on the record. It is now up to him to pursue it, perhaps through parliamentary questions.

Andrew Robathan: On a point of order, Mr. Speaker. I have given you prior notice of my point of order, which relates to the ability of Members of Parliament to hold the Executive to account—an ability that I believe Members on both sides of the House consider extremely important. This afternoon the parliamentary ombudsman will lay before Parliament a report entitled, "Access to Official Information: Declarations made under the Ministerial Code of Conduct". That relates to a series of questions that I tabled in the summer of 2000, to try to get declarations out of the Government. I asked each Department on how many occasions Ministers had made a declaration of interest according to the ministerial code of conduct. Each Department, with the honourable exception of the Department for International Development, stated that they were hiding behind exemption 2 of the code of practice on access to Government information. I asked the ombudsman whether that was reasonable—[Interruption.]

Mr. Speaker: Order. The hon. Gentleman seems to be taking a long time. He must raise a matter that the Chair can deal with.

Andrew Robathan: Sir, the ombudsman has found, for the first time, that the Government will not accept his recommendations, and has laid that before Parliament. Mr. Speaker, have you heard from any Minister that a Minister will come to the House to explain why they have defied the ombudsman for the first time?

Mr. Speaker: My answer is no.

Peter Lilley: On a point of order, Mr. Speaker. You are absolutely scrupulous and fair in trying to balance the speakers called from both sides of the House during Question Time, and the House greatly values that. I wonder whether you have noticed that Government Whips and Front Benchers are using your very fairness to try to suppress debate, discussion and questioning on the issues that are most contentious, by dissuading their own Back Benchers from rising and by getting them to withdraw questions. Thus today, having grouped three questions, one of which was withdrawn, on the key issue of the shortage of nurses and doctors, so few Labour Members rose—perhaps because they are not interested in the shortage of nurses and doctors—that only two questions from the Opposition could be asked on that key issue. Could you have words with the Whips, Mr. Speaker, about the way that this is handled?

Mr. Speaker: I can take the blame for many things, but not for the activities of the Whips.

Opposition Day
	 — 
	[5th Allotted Day]

Railtrack

[Relevant documents: The transcripts of evidence taken before the Transport Sub-Committee of the Transport, Local Government and the Regions Committee on Wednesday 17th October, HC 239-i, Wednesday 24th October, HC 239-ii, Wednesday 31st October, HC 239-iii, and Wednesday 7th November, HC 239-iv, in relation to the Sub-Committee's inquiry into Passenger Rail Franchising and the Future of Railway Infrastructure.]

Mr. Speaker: Before we come to the main business, I inform the House that there is a limit of 12 minutes on Back-Bench speeches, and also that I have selected the Government amendment.

Theresa May: I beg to move,
	That this House deplores the fact that there are discrepancies between accounts given by the Secretary of State for Transport, Local Government and the Regions to the House of his meetings with the Chairman of Railtrack and his discussions with the Rail Regulator relating to the putting into administration of Railtrack, and their accounts of these discussions; notes the concerns of overseas investors such as those expressed by David Winters, portfolio manager for Franklin Mutual, that 'a bigger risk premium is to be attached to investing in British companies now'; condemns the Secretary of State for failing to inform the House fully; notes that his failure to set the record straight has further undermined his, and the Government's, credibility; and calls on the Secretary of State to resign his post before further damage is inflicted on the Government's reputation, both in the business world and the country at large.
	I am sure that the House will want to join me in expressing our sympathy for the families of those who died in the tragic air crash in New York yesterday and, indeed, our sympathy for the people of New York. All of us who have any interest in air travel or responsibility for it will realise that this latest incident poses further challenges to an ailing airline industry and should be a matter of concern to us all.
	The Secretary of State has been brought to the House today to be called to account for the statements that he has made to the House in recent weeks, to explain why those statements have been disputed by third parties involved and to respond to concerns expressed across the House, as in the statement made on Radio 4 on Friday of last week by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who said that there were "gaps" in the various accounts. Above all, the Secretary of State is here to face up to the damage that he has done to the credibility of this Government and to the future of our rail network.
	Let us not be under any illusions. For this House, the Secretary of State's failure to account properly to Members for his actions is a matter of deep concern. For the travelling public, it is his failure to protect the interests of the railways that will hurt most.

Kevin Hughes: Will the hon. Lady give way?

Theresa May: No, I will not give way at this stage.
	The Secretary of State has been guilty of a breathtaking sleight of hand that has dealt a savage blow to future improvements in the railways, left railway workers robbed of their life savings and damaged the Government's credibility.

Hugh Bayley: Will the hon. Lady give way?

Theresa May: I will make some progress before taking interventions.
	The Secretary of State stands accused of failing fully to inform the House of events leading up to the court's decision to grant an administration order for Railtrack. Let me remind the House that only last week, on 5 November, in response to my private notice question, the Secretary of State said that, on 25 July, the chairman of Railtrack had told him that, without Government financial assistance, on 8 November he would not be able to make the statement that Railtrack was a going concern. The very next day—Tuesday 6 November—the chairman of Railtrack disputed that, saying that that was not his recollection of the meeting. Indeed, he said, "It is not true".
	Railtrack has now passed over copies of the notes of that meeting, and other relevant documentation, to the Financial Services Authority. Will the Secretary of State now commit to placing copies of his Department's note of that meeting in the House of Commons Library, and will he make a copy available to the FSA?
	Sadly, that was not the only incident last week when the Secretary of State's account of events to Parliament was challenged by a third party.

David Jamieson: Oh dear!

Theresa May: I suggest that the Under-Secretary, a former Whip, pays a little more attention to matters relating to people giving statements to the House and the veracity of those statements.
	On 5 November, I asked the Secretary of State if he had threatened the Rail Regulator with legislation if he used his powers to intervene in Railtrack. The Secretary of State replied that "there was no threat". Yet on Thursday last week, the Rail Regulator, Tom Winsor—in evidence to the Select Committee on Transport, Local Government and the Regions—stated clearly that, in a meeting on 5 October, the Secretary of State had told him that if he, the Rail Regulator, used his powers to intervene in Railtrack, the Secretary of State would introduce legislation to direct him.
	As the regulator said, he had to pause
	"to consider whether I had really heard what I had just heard."
	Not only was the Secretary of State going to direct the Rail Regulator in his powers to order an interim financial review, but he was going to direct him in all his powers: that is, take away his independence.
	The Secretary of State says that he was not threatening the Rail Regulator. I was not asking the Secretary of State if he had bullied the regulator to make him cry, or if he had shut him up in a cupboard and thrown away the key. I was asking if he had told the Rail Regulator that he would legislate if the regulator intervened. The correct answer was yes; the Secretary of State, to all intents and purposes, said no.

Louise Ellman: Is the hon. Lady aware that the Rail Regulator also told the Select Committee that he was amazed that Railtrack had bypassed the normal procedures, and had in fact not come to him for a settlement?

Theresa May: The hon. Lady might also like to note that the Rail Regulator told the Select Committee that what the Secretary of State had done put under threat Virgin projects for the purchase of tilting trains for the west coast main line—a line which I know is of particular interest to the hon. Lady—and for its new country networks, and had put under threat the independence of the Bank of England as well. Perhaps the hon. Lady would like to consider that before she intervenes in future.

Hugh Bayley: I wonder if we might establish one fact at the start of the debate. Does the hon. Lady believe that Railtrack made a sufficient contribution to rail safety and improved reliability of services in return for the hundreds of millions of pounds of public subsidy and billions of pounds of access charges that it received?

Theresa May: If the hon. Gentleman would like to examine the record of rail safety under public sector ownership and following privatisation, he will find—[Hon. Members: "Answer the question."] Just listen. He will find that, notwithstanding the tragic crashes that did occur after privatisation, at Hatfield and Paddington in particular, the safety record under privatisation actually improved.

Chris Grayling: Is my hon. Friend also aware that the Rail Regulator, in his evidence to the Select Committee, appeared to contravene the statement made by the Secretary of State that Railtrack was insolvent on Friday 5 October?

Theresa May: Indeed, and it seems that Ministers find it a little difficult to define the issue of insolvency. I note that yesterday, in another place, Lord Falconer had to apologise because there was a period when the New Millennium Experience Company, running the dome, had been insolvent when, as I understand it, he had said that it was not insolvent. It is an interesting contrast because, for the Government's pet project of the dome, they overlooked a period of insolvency pending a few grants, but for Railtrack, they could not wait to pull the plug, regardless of whether it was really insolvent.
	After the Secretary of State had made that reference in the House to the fact that there was no threat to the Rail Regulator, the Prime Minister's official spokesman, when challenged on the Rail Regulator's response to that, said that he was simply setting out "the logical consequence" of the Government's decision. Well, if it was a logical consequence, why did he not tell the House? We can only assume that he did not want Ministers to know what he proposed to do to the Rail Regulator and took great pains to keep Members in the dark. He must now explain that failure to inform the House. Moreover, he must tell the House his intentions regarding the Rail Regulator. Will the Rail Regulator retain his independence, or will the threatened legislation go ahead?
	As I have said, that question has implications for more than the railways. The former gas regulator, Clare Spottiswoode, said this morning that
	"the way things are going it's quite difficult to know what might happen because if Stephen Byers did threaten"—
	[Interruption.] When it gets difficult, no Labour Member wants to listen and hear what will actually happen—
	"emergency legislation and got his way by doing that, and it's not quite clear exactly what other, sort of, things might be got through, through threats rather than through the normal due process of the law. I think this is a very serious accusation".
	How does the Secretary of State answer that accusation?
	I am sorry to say that these are not the only examples of the Secretary of State's failure. On 15 October, he told the House that the Government had
	"met all our legal obligations regarding payments to Railtrack."—[Official Report, 15 October 2001; Vol. 372, c. 959.]
	On 5 November, in response to my hon. Friend the Member for Surrey Heath (Mr. Hawkins), he said:
	"The decision was taken on 5 October not to provide additional funding for Railtrack."—-[Official Report, 5 November 2001; Vol. 374, c. 28.]
	Yet a payment of £162 million that was due to be paid on 1 October under an agreement reached with the Rail Regulator in January was withheld by Government—four days before the Government pulled the plug on the company and two days before Railtrack staff took their dividends in the form of additional shares.
	Why was the money withheld? It was withheld supposedly because the Office for National Statistics could not decide under which heading it should appear in the national accounts. Forget the substance—just worry about the presentation.

Geraint Davies: Will the hon. Lady confirm that, had she been in the Secretary of State's position, she would have paid the money? Will she now commit the Opposition to reprivatising the successor to Railtrack?

Theresa May: I have news for the hon. Gentleman—he should watch what the Secretary of State does to the new Railtrack. The right hon. Gentleman has invited bids from the private sector, so Railtrack may well end up back in the private sector once again. That may wipe a few smiles off Labour Members' faces.
	The real answer is that the Government were playing fast and loose with Railtrack, stringing the company along. At the end of September, the company still believed that the money would be paid, but the Government did not want to pay the money because it might have jeopardised their case for administration.
	Will the Secretary of State confirm that officials in his Department and/or officials in the Treasury put pressure on the Strategic Rail Authority not to make that payment on 1 October? Will he explain why, as of 30 October, the Government were willing to make that payment? Will he publish the correspondence between his Department and the SRA relating to negotiations on the proposed company Renewco?
	Those are not idle questions. The case for the administration order put before the judge on 7 October raises several questions to be answered by the Department. Did the Secretary of State, through the statement made on his behalf by the Director General of Railways, explicitly tell the court on 7 October that the Rail Regulator had the power to intervene to bring forward an interim financial review, which could have brought forward funding for Railtrack, thus changing the company's financial position and its future solvency? Did the Secretary of State—

Brian H Donohoe: Will the hon. Lady give way?

Theresa May: No.

Hon. Members: Give way!

Mr. Speaker: Order. The hon. Lady is not giving way.

Theresa May: Did the Secretary of State, through the Director General of Railways, explicitly explain to the court that he had decided to introduce emergency legislation to remove the powers of the Rail Regulator?
	During that case, much was made of the evidence of Arthur Andersen on the financial status of the company, yet Arthur Andersen says:
	"It is not clear to what extent the forecast funding requirement could be reduced through careful cash management",
	adding that, "we have no information" regarding the company's ability
	"to raise additional funding via alternative sources."
	The Government knew. They knew that the company was preparing plans to reduce costs. They knew that the Rail Regulator could bring forward financing through an interim financial review. They knew that the company had not been given the chance to explore alternative sources of funding. They knew that they were not going to give the company that chance, because they had decided to pull the plug on Railtrack a long time before.

Gwyneth Dunwoody: Did the hon. Lady read the Rail Regulator's evidence carefully, especially the part where he said that Railtrack had not asked for an assessment, and that the company only rang him on the Saturday night to ask whether it would be possible for him to carry out an assessment in 24 hours, completing it on the Sunday and finding what the chairman described as "millions and millions" of pounds in cash by Monday morning?

Theresa May: As one in the hon. Lady's position knows well, the timetable was such that at that stage the regulator was not able to produce an interim financial review. However, she also knows—or should know—that during the whole of the summer, Railtrack was negotiating with the Government on restructuring the company and introducing a new company. The Government kept it thinking that that was going to be permitted and that money would be forthcoming, until 5 October when the chairman was called in.

Gerald Howarth: Has my hon. Friend noticed that in the summer the accounts of Railtrack were signed off and both the accountants and directors certified that it was a going concern? They had to certify that it would be a going concern for the whole of the coming year. There must have been agreement and letters from the Government offering comfort. Would it not be interesting to see those and to know why the Government ratted on them?

Theresa May: My hon. Friend makes a valid point. It would be interesting to see all the documentation that passed between the Government and Railtrack on this issue.

Martin Salter: Will the hon. Lady give way?

Theresa May: No. I want to make some progress.
	There is no doubt that in the summer the Government had already decided on other plans for Railtrack. Let me take hon. Members back to June—[Interruption.]

Mr. Speaker: Order. Let the hon. Lady speak.

Theresa May: On 6 June, in a radio call-in, the Prime Minister told listeners as regards the renationalisation of Railtrack:
	"I don't know that it would be very sensible. If we took it back, it's not just the share price we would have to pay for, we would also have to pay their debt back as well."
	Indeed, the Secretary of State himself admitted at the Labour party conference this year—just four days before he pulled the plug on the company—that the Government had received legal advice, influenced by the Human Rights Act 1998, that it could not buy back Railtrack shares at the current depressed price. Acquisition of the company's equity on top of its outstanding debt would cost the Government between £7 billion and £8 billion. I wonder when the Government asked for that legal opinion.
	Clearly, at that stage the Labour party was thinking about renationalisation, but compensating shareholders was going to cost too much. So, the Secretary of State—

Anne Campbell: Will the hon. Lady confirm that it is the Conservative party's policy to compensate shareholders to the tune of between £7 billion and £8 billion?

Theresa May: Shareholders are entitled to compensation based on the value of the company. [Hon. Members: "How much?"] Labour Members all want to know how much, but perhaps they would also like to know that those were not my words but those of the Prime Minister.

Several hon. Members: rose—

Theresa May: I will not give way.
	The Secretary of State and the Labour party were thinking about renationalisation some time ago, but compensating shareholders would cost too much. So the right hon. Gentleman—ever keen to help the new Labour project—devised a cunning plan. He knew a way of renationalising without compensating shareholders. He would drive the company to the wall, put it into administration and renationalise on the cheap. How else could he explain the way in which he and the Treasury held out on the discussions on the new company, Renewco? How else would he explain holding back the payment of £162 million that was due on 1 October, keeping the Strategic Rail Authority in the dark and not meeting its chairman from June to this day, as far as I am aware, to discuss his plans for Railtrack? How else does the right hon. Gentleman explain that he took such great pains at the beginning of April to state—a statement that he has relied on consistently since the company was put into administration—that the Government stood behind the network, not any company? How does the right hon. Gentleman explain keeping the Rail Regulator in the dark and then stopping him in his tracks when he suggested that he could help the company out?

David Laws: Is the hon. Lady aware that the head of the Financial Services Authority gave evidence to the Select Committee in which he confirmed that evidence from Railtrack has now been lodged with the FSA? He has therefore written to the Secretary of State and the Department asking for a response. Does it makes sense for the House to make a judgment on those issues and the Secretary of State's future without even bothering to read the report that the FSA is now going to prepare?

Theresa May: We are not short of accusations against the Secretary of State which we can use to make a judgment on him, notwithstanding the report that will be prepared by the FSA. The plan is clear; it was devised by the Secretary of State and the Treasury was complicit in it. But like all Baldrick's cunning plans, it does not look so clever now. It means delayed or cancelled projects; phase two of the west coast main line has been delayed; likewise Thameslink 2001 and improvements to South Central.

Several hon. Members: rose—

Theresa May: No, I am not giving way any more.
	It is clear that the plan of the Secretary of State means two years of chaos on the railways and delay in improvements. Indeed, the Prime Minister predicted that on 6 June, when he said that it would
	"probably take two years before we sorted everything out and, in those two years, we would have the railways in a state of paralysis and not be able to start the investment programme that is there now ready to go."

Nicholas Winterton: Will my hon. Friend give way?

Theresa May: Yes.

Nicholas Winterton: I am glad that I carry some small influence. Is my hon. Friend prepared to go into detail about the implications of that sad saga for the west coast main line, which is critical to the economic future of the north-west of England?

Theresa May: I should tell my hon. Friend that I never could resist a more mature man.
	The plan has indeed delayed the second phase of the west coast main line project; I know that that is a cause that my hon. Friend has valiantly championed. As the Rail Regulator made clear in his evidence to the Select Committee, it has caused extreme problems for Virgin in the purchase of tilting trains. Indeed, the Government can kiss goodbye to the subsidy that they were going to receive as a result of those developments.

Brian H Donohoe: Will the hon. Lady give way?

Theresa May: No. The hon. Gentleman should take that as a compliment; I obviously do not think that he is more mature.
	The plan of the Secretary of State means increased cost to the taxpayer as the private sector walks away from investment or demands more government guarantees or a higher price for that investment.

Several hon. Members: rose—

Theresa May: No, I am not going to give way any more—[Interruption.]

Mr. Speaker: Order. Do not drown the hon. Lady out.

Theresa May: Thank you, Mr. Speaker.
	Claire Spottiswoode, the former gas regulator, said this morning when talking about Government intervention in Railtrack that
	"that would increase the cost of raising capital in the markets. And, of course, if the cost of raising finance for Governments goes up, then that affects all of us through increased taxes."
	The right hon. Gentleman's plan means that small shareholders, like Edith Knowles, aged 81, will lose their life savings—[Interruption.] It is a sad day when members of the Labour party are not interested in the problems faced by elderly people in this country. Edith Knowles from Preston has told how she paid £13,000 over the years for Railtrack shares which she hoped would cover any nursing care that she might need. She says:
	"Now all I have left is my pension. We aren't the fat cats Mr. Byers and MPs think we are."
	The Secretary of State's plan means that the Government could end up in the courts. He has let the railways down; he has let passengers down; he has let railway workers down; he has let taxpayers down; he has let savers down; and he has let the Government down.
	The Secretary of State stands accused of failing to inform the House; of holding promised funding back from the company; of stringing the company along by talking about the future, while he knew that he was going to pull the plug on it; of letting Railtrack staff take dividends as extra shares, when he knew that the shares would soon be worthless; of increasing the cost to the taxpayer of future investment in the railways; and of causing delay to the improvements in the rail infrastructure. The Secretary of State stands accused. There is only one verdict for the House to return: guilty as charged. 4.1 pm

Stephen Byers: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	'recognises that many of the problems of the railways stem from the years of underfunding of the industry by the previous Conservative Government and the shambles of their rushed and ideologically driven privatisation of Railtrack; welcomes the decisive action that Ministers have taken in regard to Railtrack which will be welcomed by the travelling public; congratulates the Government for developing contingency plans for the industry as soon as it was told of the company's plight; rejects the policies of the Opposition, who would have offered the company a blank cheque and even now wish to pay over £1bn to compensate shareholders; and welcomes the work of Ministers in developing positive policies to take the industry forward in terms of a successor to Railtrack and to put the interests of passengers first.'.
	At the outset, I associate myself with the remarks of the hon. Member for Maidenhead (Mrs. May) in relation to the tragic accident in the skies over New York yesterday. I am sure that the sympathies of the entire House go to those affected, their families and their loved ones.
	We are witnessing a Tory smokescreen—an attempt to hide the fact that the Labour Government, and I as the responsible Secretary of State, have taken action against the failed privatisation that was Railtrack. The travelling public know that Railtrack was a failure. The City knows that Railtrack was a failure. The railway industry knows that Railtrack was a failure. The only people who regard it as a success are the architects of Railtrack: the Conservative party.
	The hon. Lady made a number of allegations and posed some questions this afternoon. It is interesting to note that they are the same allegations and the same questions raised by people who have a vested interest. There are those who seek compensation from the Government. Those shareholders are now clearly aided and abetted by the Conservative party. The Government's position is clear. We believe, as the Prime Minister said last week, that shareholders should get what they are entitled to, but that there should be no new taxpayers' money to compensate them.
	We now know that Railtrack has said that it wants £3.60 a share, guaranteed by the Government, regardless of the company's assets or liabilities. That would mean more than £1 billion of taxpayers' money being used to compensate shareholders for a bad investment. No doubt pressure will continue to try to force the Government to pay for the company's incompetence, but we are clear: investments can go down, as well as up. As we said on 2 April, we stand
	"behind the rail system but not behind individual rail companies and their shareholders".

Douglas Hogg: Will the right hon. Gentleman tell the House what he has so far refused to tell me in reply to my written question: when, after 1 August, did his Department receive advice from the Treasury that it was unlikely that public funding for Railtrack would be approved?

Stephen Byers: The issue that the right hon. and learned Gentleman raises concerns the relationship between different Departments. The position is clear. I took the decision on 5 October based on the advice that I had received, including advice from my colleagues in the Treasury.

John Redwood: On 3 July, the right hon. Gentleman told the House that it would cost £6 billion to set up a not-for-profit company, £2 billion to pay the shareholders and £4 billion to pay the debt holders. We know that he has decided to mug the shareholders and rob them of the whole £2 billion, but is it also his intention to rob the bond holders? Should they not be told, or does his scheme cost £4 billion plus the cost of sorting out the mess?

Stephen Byers: The right hon. Gentleman knows, because I have made the statement in the House before, that on 25 July circumstances changed dramatically. That was the day on which the chairman of Railtrack, John Robinson, came to see me and outlined the position as he saw it. I will say something specifically about 25 July in a couple of minutes because the hon. Member for Maidenhead raised some serious points about that discussion.
	The Conservative party's difficulty with the issue is that Railtrack was the last throw of the privatisation dice when, in the dying days of the Major Government, it was floated on the stock market. Helpfully, the flotation was subject to a report by the Public Accounts Committee during the previous Parliament, when it was chaired by the right hon. Member for Haltemprice and Howden (David Davis), who is now chairman of the Conservative party. That report, the twenty-fourth report of the Public Accounts Committee, makes valuable reading and I commend it to Opposition Members.

Michael Fabricant: Will the right hon. Gentleman give way?

Stephen Byers: No, because I want to address this particular issue, but I will be more than happy to give way to the hon. Gentleman later.
	The key finding in relation to the flotation of Railtrack that emerged from the Public Accounts Committee's report—bear it in mind that it was rushed through ahead of the 1997 general election—was:
	"The timing of the sale was a factor in the poor value achieved, and the Department themselves acknowledge that the large increase in Railtrack share price since flotation was because it had been undervalued and sold in haste."
	The report goes on to disclose the scale of the loss to the taxpayer.

Several hon. Members: rose—

Stephen Byers: I want to make this point, but I will give way in a minute.
	The report continues:
	"The share price of Railtrack quadrupled in two and a half years with the result that the taxpayer received less than £2 billion from the sale of shares compared with the company's current valuation of nearly £8 billion."
	At the time of the report, there had been a £6 billion loss to the taxpayer.

Martin Salter: Will my right hon. Friend explain to the House, in addition to the staggering increase in the share value of Railtrack after privatisation, exactly how much money has been paid to the shareholders and directors? The information that I have suggests that about £700 million has been paid to shareholders and £10.4 million has been paid in bonuses to Railtrack directors. Are those figures correct?

Stephen Byers: My hon. Friend is absolutely right. During the period of privatisation, some £700 million was paid in dividends to shareholders and some £10.4 million to directors by way of remuneration.

Several hon. Members: rose—

Stephen Byers: Members of the Select Committee will have an opportunity tomorrow afternoon to quiz me at great length, so I shall give way to the hon. Member for Lichfield (Michael Fabricant).

Michael Fabricant: Will the Secretary of State answer the question of my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg), and say precisely on what date he was advised by the Treasury that funding would not be made available to bail out Railtrack?

Stephen Byers: I have answered the question, although hon. Members might not like the answer. The decision was mine, taken on behalf of the Government, on Friday 5 October. That was when the decision was taken by myself as Secretary of State. It was a decision for me to take on behalf of the Government. That is the situation. I have explained it to the House before.

Michael Fabricant: On a point of order, Mr. Speaker. I think that the Secretary of State has misunderstood my question. I asked him not when he made the decision, but when he was advised.

Mr. Speaker: The Secretary of State is entitled to misunderstand questions.

Stephen Byers: I will try not to misunderstand the question, Mr. Speaker.

Michael Fabricant: Will the Secretary of State give way?

Stephen Byers: If I can have a second chance of explaining the matter to the hon. Gentleman, he may find it beneficial. I know that he has not had experience of government and is unlikely to get any, but the reality is that, in government, there are Secretaries of State who are responsible for taking decisions. I was responsible for taking the decision in relation to Railtrack.

Ronnie Campbell: It was the right one.

Stephen Byers: I thank my hon. Friend very much. I took the decision on Friday 5 October.

Several hon. Members: rose—

Stephen Byers: I want to make some progress, as many hon. Members wish to speak.

Theresa May: Will the right hon. Gentleman give way?

Stephen Byers: Of course, I give way to the hon. Lady.

Theresa May: Perhaps I can give the Secretary of State some assistance in this matter. Will he inform the House whether he had any discussions with the Treasury, or whether any of his officials had discussions with Treasury officials, in which it was indicated that funding would not be forthcoming, prior to 28 September, the date on which The Stationery Office published the administration order?

Stephen Byers: I have to say that the question of the printer's mark of 28 September—[Interruption.] That is the issue that the hon. Lady raised. I have already explained that the nature of government is such that there is advice that Ministers receive, and decisions were taken on Friday 5 October. That is the situation. [Interruption.]

Mr. Speaker: Order. The House should allow the Secretary of State to answer. It is unfair not to do so.

Stephen Byers: In relation to 28 September, I explained to the House last Monday that that was a printer's mark, and not a fax, as some people suggested. It was a printer's mark of the sort that The Stationery Office often uses. The issue was raised by the hon. Member for Maidenhead. I am seeking to outline the circumstances. I shall answer the allegations in a minute.

Theresa May: I am grateful to the Secretary of State for giving way a second time. I did not ask him about 28 September and the printing of the document. I asked him whether he or any officials in his Department had had any discussions prior to that date with Ministers or officials in the Treasury at which it was indicated that funding for Railtrack was unlikely to be forthcoming from the Treasury. It is a simple question—is the answer yes or no?

Stephen Byers: The situation is this, as I have explained to the House on two previous occasions: there were two options that were being worked up. One was a situation of a decision being taken to put Railtrack into railway administration. Of course, in all those discussions, various Departments would have been involved. Alongside that were the restructuring proposals being made by Railtrack, which were being actively considered at the same time. We had two programmes of work that went alongside each other, with a decision taken on Friday 5 October. I hope that that makes it perfectly clear for Opposition Members.

Martin Salter: Will my right hon. Friend give way?

Stephen Byers: No; I want to make some progress.
	I am trying to explain the background to Railtrack's formation, because there is a very important message here about how the Conservatives use public money to prop up their own approach to public services. I have already outlined the useful finding from the chairman of the Conservative party that the shares were undervalued by some £6 billion. But the situation is worse than that, because to ensure that the flotation was a success, £1.4 billion of debt owed to the taxpayer was written off by the Conservative Government. In addition, £69 million of profit, earned while Railtrack was in public ownership, was held back from the public, but then given to shareholders by way of a dividend. Taxpayers' money was recycled as profit for Railtrack, sprinkled like confetti among shareholders—yet not one of them was a shareholder at the time when that profit was made.
	It is also enlightening—it shows the climate of the times under the Conservatives—to consider how the shares in Railtrack were marketed at the time of flotation. One financial adviser produced a pamphlet that stated:
	"Railtrack is essentially a property company and the land that Railtrack will own could be regarded as one of the most valuable pieces of real estate in the United Kingdom."
	This is the marketing for Railtrack. It refers to these sites as being ripe for exploitation, with retail developments at mainline stations being able to compete with major department stores up and down the country. The pamphlet then described how stations would have
	"a captive audience of passengers who are all potential customers . . . This waiting time is valuable selling time for retailers and food providers".
	That was the sales pitch for Railtrack flotation: to capture passengers at railway stations that have been redeveloped as shopping centres.
	The hon. Member for Maidenhead has made—

James Gray: Will the right hon. Gentleman give way?

Stephen Byers: No. I want to address the thrust of the hon. Lady's charges this afternoon, because they are important and significant. I want to address these allegations, because that is the basis on which this debate is being held.
	The hon. Lady has not addressed the important policy issues concerning my decisions. Instead, she fell back on innuendo, smear and allegations. So, today, let us cut through all that and look at the facts. I want to get on to the substance of the allegations that have been made.

Theresa May: Is the right hon. Gentleman saying to the House that the evidence given by the Rail Regulator to the Select Committee on the Treasury was innuendo, smear and allegation? That is what he has just implied.

Stephen Byers: I shall come to the Rail Regulator. It was the hon. Lady's comments to which I was referring. I shall address the position of the Rail Regulator specifically. Before I do so, I want to address the issue raised by the hon. Lady about the meeting that I had on 25 July.

Brian H Donohoe: Will my right hon. Friend give way?

Stephen Byers: I shall not give way, for the simple reason that I want to put on the record the facts in relation to the allegations made by the hon. Lady. I hope that the House will indulge me if I do not take any interventions while I put on record the truth of the situation.
	The first allegation is in relation to the meeting between me and the chairman of Railtrack held on 25 July. I am aware that there has been some disagreement about what was said at that meeting. In my earlier statements to the House, I sought briefly to describe those discussions. Let me now set out the events in a little more detail.

Mark Francois: Will the Secretary of State give way?

Mr. Speaker: Order. The Secretary of State is not giving way, and when I rise, I expect hon. Members to be seated. Could we have some order in the House? The Secretary of State is entitled—[Interruption.] The rabble is not just over there. The Secretary of State is entitled to a hearing.

Stephen Byers: On 25 July, Mr. Robinson discussed with me a range of issues about Railtrack, including its management and the difficulties that it was being presented with by the present regime of regulation. He outlined to me in general terms the seriousness of Railtrack's financial situation, making it clear that the position was far worse than he had first thought. He spoke to me about needing a soft letter of comfort from the Government by the autumn, before being able to access existing banking facilities. If Railtrack was unable to access those facilities or receive extra financial assistance from the Government, it was clear that, on 8 November, when Railtrack was due to give its interim results, it would be unable to make the critical statement that it was a going concern.
	At the same time, Mr. Robinson suggested that my officials have further discussions with Railtrack's advisers, Credit Suisse First Boston, to consider in more detail the state of the company's finances and management, and a series of proposals for restructuring the company and the regime of regulations. Initial discussions took place between my officials and Railtrack's advisers on 27 July, and the message was stark. It was clear that the viability of the company was at issue. That is the sequence of events, and I hope that that clarifies the position for the benefit of the House.

Theresa May: Will the Secretary of State give way?

Stephen Byers: I want to put on the record the specific points in relation to the series of allegations that have been made.
	The second allegation relates to the so-called threats to the Rail Regulator, Tom Winsor. The hon. Lady alleges that I made threats to the Rail Regulator; she did so again today. Now that the Select Committee has helpfully made the transcript available, Members will see clearly that the Rail Regulator at no stage said that he had been threatened. I ask Members to read the transcript, which is here. That was put to him and that was the position.
	I want to get on the record the truth of the situation. The hon. Lady made the allegation. I made it clear to the House on Monday 5 November that there were no threats. The first people to raise the issue of suspending the regulator were Railtrack's own advisers. I also made it clear to the House that, in my meeting with the chairman of Railtrack, we covered how the regulator would deal with those matters. Having taken the decision that we could not pour unlimited amounts of taxpayers' money into Railtrack additional to that which had already been agreed, it followed that, if necessary, we would introduce legislation to ensure that that objective was achieved. That was communicated to the regulator in response to a point that he raised with me.
	I made a factually accurate statement that I had the necessary authority to introduce legislation if need be. It would, of course, have been for both Houses of Parliament to consider the merits of such legislation. There were no threats. Just imagine the outcry there would have been—[Interruption.] No threats. Imagine the outcry there would have been had I refused to be open with the regulator or had I misled him about the Government's intentions. There would have been cause for complaint and cause for the Opposition to raise the matter in the House, but that was not the case. It was raised in discussion by the regulator, and I gave him a factual reply.

Several hon. Members: rose—

Stephen Byers: I am not giving way, because I want to get points to do with the allegations on the record.
	Most importantly, the regulator himself, in his evidence before the Select Committee, clearly did not feel threatened in any way. As he told the Select Committee, for him it was business as usual. It was clear that he did not feel that his independence had been undermined and clear that he retained his independence unless and until it was removed by Parliament.

Several hon. Members: rose—

Mr. Speaker: Order. The Secretary of State has said that he is not giving way.

Stephen Byers: The regulator told the Select Committee that he informed the chairman of Railtrack on the evening of Saturday 6 October that if an application was made to him for an interim review, it would be considered and it would be possible for the regulator immediately and publicly to announce that he had begun such a review. That all took place on the evening of Saturday 6 October, the evening before the High Court considered my—

Anne McIntosh: On a point of order, Mr. Speaker. I have a transcript here, which I understand is—

Andrew Bennett: A shareholder.

Anne McIntosh: Yes, I am a shareholder in Railtrack, Eurotunnel and First Group.
	I have in my possession a transcript, which I understand was not made available to the public. I am not sure of its status, but it is not the evidence taken by the Committee.

Mr. Speaker: Order. Those are matters for debate. Hon. Members can rebut what the Secretary of State has said.

Stephen Byers: If the hon. Lady is challenging the accuracy of the transcript, that is a matter for the Select Committee.

Anne McIntosh: Will the Secretary of State give way?

Stephen Byers: If it is on a point of clarification, then of course.

Anne McIntosh: I am most grateful to the right hon. Gentleman. I shall not enter into the semantics of whether it was a threat or a promise to act. The evidence that we took from the Rail Regulator was that his ability to intervene and apply for an interim review was completely neutralised. Why did the Secretary of State take away the independence of the only person able to protect the investment in Railtrack?

Stephen Byers: Two issues are important here. First, only this House and another place could take away the independence of the regulator.
	Secondly, it is alleged that I somehow took away the regulator's independence so that he could not act. The evidence given by the Rail Regulator is precise on this point. On Saturday evening, 6 October, the regulator is phoned by the chairman and the chief executive of Railtrack. They ask him, "Can you conduct an interim review?" He says, "Yes, I can." That is what the Rail Regulator said last week in evidence before the Select Committee. The Rail Regulator told the Select Committee that, if an application were made to him for an interim review, he would consider it and
	"it would be possible . . . immediately and publicly to announce"
	that he had begun that review.
	The following day, my petition was heard in the High Court. No move was made to oppose my petition for railway administration.

Theresa May: As ever, the Secretary of State has been careful in choosing his words and in quoting the Rail Regulator. Will he confirm that the Rail Regulator went on to say to the Select Committee:
	"but I did not think it would be possible for me to complete it in 24 hours over a weekend"?
	That is what he had told the chairman of Railtrack.

Stephen Byers: I do not know who advised the hon. Lady to put that quote in the public arena, but the truth is this: had Railtrack applied for a review on the Saturday evening, which is what the regulator indicated that he would be prepared to accept, then—this is the crucial point—on the Saturday evening, the regulator would have made public the fact that the review had begun. On the Sunday afternoon, the High Court judge, knowing that a review had commenced, would probably not have granted the petition. That is the situation.
	However, on that Sunday afternoon, Railtrack attended the High Court with counsel, and I presented my petition. Railtrack did not oppose the petition. Had Railtrack refused—

Bernard Jenkin: You refused it.

Stephen Byers: For the benefit of Opposition Members, I cannot refuse an interim review. On the evening of Saturday 6 October, the Rail Regulator indicated to Railtrack that he would be prepared to conduct a review, or consider it, if an application were made. No such application was made by Railtrack.

Andrew Bennett: Does my right hon. Friend accept that it seems incredible that Railtrack, knowing immediately after the Hatfield disaster that it might have financial difficulties, did not consider going to the Rail Regulator and asking for a review, but preferred to try to negotiate with the Government? If Railtrack was really concerned to protect its shareholders, should it not at least have approached the regulator before that date, almost 24 hours before the order was made?

Stephen Byers: Those are issues for Railtrack rather than for me, as Secretary of State. People will no doubt want to raise questions about the conduct of Railtrack.

Geraint Davies: Will my right hon. Friend give way?

Stephen Byers: No, because I want to put on the record exactly what happened, in answer to the serious allegations that have been made by the hon. Member for Maidenhead.
	The final point that the hon. Lady made was that, somehow, I had kept my approach, and the possibility of legislation, secret from the House. That is a serious allegation. I have made no secret of our position. It was disclosed in a letter from our financial advisers, which formed part of our evidence to the High Court on 7 October. That same letter was one of a number of papers placed in the Library of the House on 23 October—so much for keeping it secret. It was placed in the Library on 23 October—a big secret. More important, on 2 November, the shadow Minister for Transport, the hon. Member for Brentwood and Ongar (Mr. Pickles), received a parliamentary reply from my right hon. Friend the Minister for Transport drawing his attention to the fact that the papers had been placed in the House of Commons Library. [Interruption.] No, it was not after the event. Clearly, there was a breakdown of communication between the beauty and the beast—[Hon. Members: "Who is the beauty?"] It is a close-run thing.
	There was clearly a breakdown of communication because last Wednesday 7 November, the hon. Member for Maidenhead said about the possibility of introducing legislation that it was a stark new piece of evidence. It had been in the House of Commons Library for over a fortnight. That is the reality. Therefore, the position in relation to the regulator is this: open and honest, no misleading of the regulator and the House kept fully informed of the Government's position.

Eleanor Laing: Is the Secretary of State in effect saying that he values the independence of the Rail Regulator, and that he will protect in perpetuity that independence? It is not what the Rail Regulator appears to have understood the Secretary of State to say when he said:
	"The Secretary of State said to me that if there were an application for an interim review he had the necessary authority to introduce immediate legislation to prevent the review taking place."
	That is a threat to independence. Is the Secretary of State now saying that he will protect the independence of the Rail Regulator?

Stephen Byers: The independence of the Rail Regulator is a matter for the House. It is as simple as that. Conservative Members will be aware of that. That is the situation.

Brian H Donohoe: Will my right hon. Friend give way?

Stephen Byers: What happened is that, in conversation, it was raised by the regulator—

Brian H Donohoe: Please.

Stephen Byers: I had better give way.

Brian H Donohoe: I make just two points. First, did the regulator not say last week to the Select Committee that Railtrack at no time had ever approached him, and indeed, he felt that he was being cut out of the loop? Secondly, Railtrack thought that the Government were a soft touch and hoped to get the money out of the Government because it knew full well that it was never going to get it out of the regulator.

Stephen Byers: As a member of the Select Committee, my hon. Friend will be aware of the evidence that was given last week. I think that he has accurately stated the regulator's position.
	One other major allegation was made by the hon. Member for Maidenhead—

Theresa May: Will the Secretary of State give way?

Stephen Byers: No. I have given way several times to the hon. Lady. I want to go on to that particular point. I want to put on the record the response to her very important allegation that the £162 million that was legally due to be paid on 1 October was held back by the Government. I want to be clear about that, too.
	As part of the April deal, £337 million was due to be paid on 1 October, which the Government were legally obliged to pay. That was paid in full, every penny, on 1 October, but in addition, in April, all parties accepted that they would use their best endeavours to establish a special purpose vehicle called Renewco. It was recognised that it could be only on the basis of best endeavours because the arrangement could go ahead only if Renewco were not classified as being in the public sector. By 1 October, that condition had not been met, so the payment could not be made.
	However, the payment of the £162 million is a real diversion from the issues facing Railtrack. In discussions on restructuring, Railtrack made it clear that, even with the Renewco arrangement in place, Railtrack would still need additional Government support, and as my unchallenged petition to the High Court said, Railtrack would have a deficit of some £700 million by 8 December this year, and £1.7 billion by the end of March next year. Those were the figures. Railtrack's own view was that Renewco would not make a difference to those figures.

Geraint Davies: Is my right hon. Friend aware that, as the Select Committee minutes show, on 7 October Tom Winsor said:
	"right up to the 5th October 2001"—
	which is the Friday before that Saturday—
	"I did not know that the company was claiming to government that it was in serious financial difficulties . . . The company's representations to my office were all consistent with the company having enough money to keep going until . . . sometime in summer 2002".
	In other words, Railtrack was misleading the regulator. That is why, as we have heard, Railtrack presented the new petition to the regulator.

Stephen Byers: I think that when all hon. Members have the opportunity to go through the evidence and the regulator's statements, they will see that Railtrack did not avail itself of the possibility of an interim review although it was invited to do so by the regulator on the evening of Saturday 6 October. The petition that I presented to the High Court was unchallenged although Railtrack and its counsel appeared in court.

Chris Grayling: Will the right hon. Gentleman give way?

Stephen Byers: No. I have been very generous in giving way, and I want to conclude my remarks because many other hon. Members wish to speak.
	The serious allegations have been addressed.

Theresa May: rose—

Hon. Members: Give way.

Stephen Byers: The record will show that I have previously given way to the hon. Member for Maidenhead. [Interruption.]

Mr. Speaker: Order. The Secretary of State has stated that he is not giving way, and that includes to Front Benchers.

Stephen Byers: Hon. Members know that I am generous in giving way. I have already given way in this debate three or four times to the hon. Member for Maidenhead. I should now like to address the issue at hand, and specifically to examine Railtrack's stewardship of the railway network.
	My decision on 5 October to refuse further funding to Railtrack was not an easy one. However, I firmly believe that Railtrack was not part of the solution for our railways but a major problem. Let us consider Railtrack's stewardship. No asset condition register for the rail network is yet in place. Railtrack consistently opted not to invest in and maintain the network to a sufficiently high standard. Six months after Hatfield, more than 1,000 temporary speed restrictions were still in place. Costs on the crucial west coast main line project had leapt from about £2 billion to £6.3 billion under Railtrack's leadership, which is an increase of more than £4 billion.
	We had to say, "Enough is enough. Let us get to the root cause. Let us look at the structure and put it right, so that for the extra money that the Government are committing to railways, we will get a real return for the travelling public."
	The Transport, Local Government and the Regions Committee has made its concerns very clear. It said:
	"We . . . agree with the Rail Regulator's assessment, that Railtrack has not maintained and renewed the network to a standard which could reasonably be expected of it. Its past record is simply not acceptable."
	The Committee continued:
	"The system of managing contractors who carry out maintenance and renewal work on the railway through the system of 'cascaded safety cases' has been shown to have utterly failed. It is not just the system that has failed: Railtrack's management of its contractors has been woeful."
	The Rail Regulator—the man who is responsible for regulation and for maintaining the railway network's independence—made the following points when asked whether he would have provided extra funding for Railtrack.

Gregory Barker: On a point of order, Mr. Speaker. Is it not unprecedented for a debate of this importance to be held without the attendance of a single Cabinet member bar the Secretary of State?

Mr. Speaker: Order. That is not a point of order.

Stephen Byers: The advice that I gave to my Cabinet colleagues was not to be too exercised by a half-day Opposition debate. To be honest, most Cabinet members have far more important things to do than to listen to the rubbish that we have heard today from Opposition Members.
	I was about to give the House the benefit of the Rail Regulator's view on Railtrack. Asked whether he would have provided extra funds for Railtrack, he said that he had no duty or inclination to give taxpayers' money to a company to make up for its being inefficient and incompetent. It was possible, he said, that the company thought that if he would not give it money for being inefficient and incompetent, maybe the Government would. He thought that that was
	"an extraordinary judgement for the company to make".

Theresa May: rose—

Stephen Byers: No, I will not give way. The hon. Lady has had her opportunity: she has intervened four or five times, and she has not scored a hit so far.
	Interestingly, one group did very well out of Railtrack. We have heard about the dividends paid over the years—£700 million—but the other group that did well was the directors of Railtrack. My hon. Friend the Member for Reading, West (Mr. Salter) gave the figures: the directors were paid more than £10 million between 1996 and 2001, including £1.3 million paid to Gerald Corbett, Railtrack's chief executive. This is the man who told Members of Parliament in the year before the crash at Ladbroke Grove that the tracks outside Paddington were safe. Lord Cullen described those comments as complacent or misleading.
	We have heard it all before, and we will hear it all again. This is the Tory privatisation culture that led the chief executive of Railtrack to tell Members of Parliament that the tracks outside Paddington were safe, which, according to Lord Cullen's investigation, was complacent or misleading. Two days after his report, which said that Gerald Corbett was complacent or misleading, Railtrack revealed the payment of £1.3 million. It is clear that the only things that Railtrack could get working on time were the executive compensation schemes.
	This country has the fourth largest economy in the world, but we do not have a railway service to match it. Action was needed to put the interests of long-suffering rail passengers first. They know that Railtrack has been at the heart of the problems experienced by the industry—a company that failed to offer an adequate service, and then came asking for yet more taxpayers' money. The Tories, in this debate and previously, have backed the interests of a quarter of a million shareholders against the interests—[Interruption.]

Mr. Speaker: Order. Hon. Members should not shout.

Stephen Byers: The debate will show clearly that the Tories are backing the interests of 250,000 shareholders against the interests of 2.5 million people who travel on the railway network every day. They cannot come to terms with the fact that a failed privatisation has been ended by the Government.
	Delivering to passengers will now come before dividends for shareholders. Our people and our country deserve a railway system that is fit for the 21st century, and, no matter what the criticisms may be, we shall make the decisions that are necessary to enable that to happen.

John Smith: On a point of order, Mr. Speaker. Can you offer me some guidance? I think that, during my right hon. Friend's speech, an Opposition Member intervened claiming to be a shareholder in Railtrack. I may have misheard, but I understood that that was what was being said. Given the nature of the debate—part of whose purpose is, I understand, to shore up the share value with taxpayers' money—is it in order for shareholders to take part in it, or not to declare an interest?

Mr. Speaker: It is up to individual hon. Members to declare an interest. Additionally, I remind hon. Members that we must have some calmness in the Chamber.

Don Foster: I begin by joining the hon. Member for Maidenhead (Mrs. May) and the Secretary of State in expressing sympathy to all who were affected by the dreadful air crash in New York yesterday.
	Given that so much desperately needs to be put right about our railways, it is regrettable that precious parliamentary time is being spent on a debate that is largely about who said what to whom, and when that was said. We have failed to address the key problems of our railways for far too long. It is a great pity that the Labour Government failed to act more quickly. It is also a great pity that, in this debate, we have not heard a single, solitary solution to the problems of the railways from any Conservative Member. Even worse, no Conservative Member recognises the nature of the real problems that faced Railtrack and that needed to be resolved. Despite the excellent work of many Railtrack employees, there were significant worries about the organisation, and reference has already been made to the matter of golden goodbyes. Although the Secretary of State referred to Gerald Corbett, he forgot to add that it was Gerald Corbett who apologised for Railtrack's failures.
	There have been numerous worries about Railtrack's repeated failure to meet each of the new deadlines that it set itself in order to get back to so-called normal following the Hatfield tragedy. There have been worries about the management and supervision of sub-contractors, and about cost overruns. Many people who saw the work of Railtrack at close quarters have expressed considerable worry. Much of the debate about Tom Winsor's evidence to the Select Committee on Transport, Local Government and the Regions last week has been about whether he was threatened by the Secretary of State. Sadly, little attention has been focused on some of the Rail Regulator's other comments about precisely what he thought about Railtrack as an organisation. He said that he believed that they were the authors of their own misfortune, and that the core problem was the competence of the management of the company. He added that
	"I have no duty—and indeed no inclination—to give . . . taxpayers' money to the company for being inefficient or incompetent."
	Amazingly, the Rail Regulator went on to say that, for the life of him, he could not understand why a company that depended so much on its assets should have failed to produce a proper detailed asset register. He had to ask Railtrack on three separate occasions to produce voluntarily such an asset register and, when it failed to do that, he had to make its production obligatory. Tom Winsor was clearly worried, as were the train operating companies.
	It is worth reflecting that over the past four weeks—from 13 October—there has been a significant decline in passenger numbers on our railways. Approximately 2 million people have abandoned the railway system. Phil White, the chief executive of National Express, which is one of the largest train operating companies, was asked the reason for that. He made it clear that he blamed Railtrack and, not least, passengers' increasing frustration with the number of speed restrictions that are still in place.
	Of course something had to be done—not least because of the financial viability of Railtrack. In January, the company was placed on credit watch and then its credit ratings were dropped. On 18 February, Railtrack itself announced that it was significantly slashing its five-year investment programme. On 2 April, Railtrack went round with its now infamous begging bowl, asking for additional money.

Chris Grayling: As the hon. Gentleman is giving the same speech that he gave in Westminster Hall this morning, perhaps I could make the same intervention that I made then. Does he agree that one of the reasons for the financial pressures on Railtrack was that the regulator had given the company what amounted to, in effect, a standstill budget for the next five years for repairs and maintenance of the network, despite the fact that the company was being asked to preside over a 50 per cent. increase in passenger numbers over the next few years?

Don Foster: Let me shock the hon. Gentleman by giving him the same answer that I gave him in Westminster Hall: he will be well aware that, before that time, Railtrack had already decided to slash its investment budget. Furthermore, let me give him some additional information that I did not give him in Westminster Hall: it is clearly on the record in the Rail Regulator's evidence to the Select Committee that, on many occasions, he had made the offer to the company that it could come to him for a further review, but it failed to take up that offer. It is further evidence of real concern as to the competence of the management of the company that it failed to take up such offers.
	It is also important to consider what happened as we came nearer and nearer to the Secretary of State's decision. On 24 May, Railtrack reported an annual loss of £534 million and the share price fell by a further 3.7 per cent. Throughout the life of the company, the general trend of its share price has been downward. By 6 June, the share value had fallen so low that the company was ejected from the FTSE 100. Interestingly, one of the main commentators, A.B.N. Amro noted:
	"The full year results should leave investors in no doubt that their equity is in danger of being wiped out."
	It is a great pity that Railtrack's management did not warn shareholders of that situation.
	Amro also pointed out that Railtrack
	"has been valued on hope rather than fundamentals for too long".
	It was thus hardly surprising that, on 12 June, the Rail Regulator advised Railtrack to stop hawking its begging bowl around.
	In August, as the Secretary of State has already told us, Railtrack's own advisers suggested that there were only three options: restructuring, renationalisation or receivership. As all those problems were mounting, it makes perfect sense to those of us on the Liberal Democrat Benches that the Secretary of State had to act. He had to do something in the interests of the public.
	Although the Secretary of State must bear some responsibility for the way that he acted—as I shall explain in a moment—the shareholders, whose grievances have been so loudly expressed by Conservative Front Benchers, should be looking to the real author of their difficulty: not the Secretary of State, but mainly the management of Railtrack.
	I fully realise that many of those shareholders are Railtrack employees, but I hope that they will reflect on the interesting fact that on 25 July the company was prepared to hand out to its employees shares worth £5 million, but two weeks later began to develop plans to slash one in 12 of the work force. That is the measure of its regard for its employees.

Michael Weir: I am interested in the point that the hon. Gentleman makes about the company's shareholders. In a previous life—in the latter part of last year—I was approached by a stockbroker who was advising one of my clients to invest in Railtrack. I pointed out that the share price was poor at that point, but I was told: "Don't worry about that, because the assets are much greater. Even if anything goes wrong, you'll be all right". The fact that such advice was being given to shareholders may be one factor, but they should have been aware of the falling share price even at that time.

Don Foster: Indeed they should, and attention was drawn to that point on 25 July. The hon. Gentleman hits on an important point. I hope that the House will remember that the hon. Member for Maidenhead suggested that the shares were now completely worthless. That is simply not true, for the very reason that the hon. Gentleman gives; there are still significant assets available to shareholders.

Stephen Byers: It is also important to make the point that there are effectively two companies. The first, Railtrack plc, is in administration. The other, Railtrack Group, is not in administration and the value in Railtrack Group is available to the shareholders of Railtrack.

Don Foster: I am grateful to the Secretary of State for making that point, but we shall return in a minute to the issue of the two companies and the confusion that has existed because of that. The Secretary of State is absolutely right to remind us that significant assets are still available to shareholders and those are the subject of on-going deliberations. The shares are not worthless, as the hon. Member for Maidenhead said.
	Our argument is that the Secretary of State was right to act. He was certainly right to decide that the solution was not one that involved pouring yet more taxpayers' money into this ailing and failing company. He was right also to seek to develop a solution that would end the conflict in a monopoly between shareholder profit and passenger safety. Something had to be done, and the Secretary of State's proposals to seek to develop a not-for-profit public interest company were definitely right.
	It is not surprising that we say that because, as far back as 14 February, we proposed that model to the Secretary of State. The week after we made our proposal, the Institute for Public Policy Research made a similar proposal. I acknowledge that the solution was the right one, but I fear that the way in which this has been handled, in part by the Secretary of State, may mean that following a botched privatisation, we are in serious danger of botching the solution with which he has come forward.

John Pugh: Does my hon. Friend agree that the Secretary of State could have exonerated himself from the charge of planning renationalisation by pointing out that nobody would willingly and with premeditation cause as much confusion in the railway industry as he has by his actions?

Don Foster: I am grateful to my hon. Friend and I will come on to why I believe the Secretary of State, having got the right solution, has caused great confusion. Partly that was because the Secretary of State had to rush into making the decision. For a long time, the Labour party—particularly when in opposition—railed against the Conservative Government's privatisation of the railways. One had the impression that, once in Government, Labour would take some serious action to address the problems. But, in practice, they did very little in their first term of office.
	There were times during their first term when one began to wonder whether they had changed their tune and were now great fans of privatisation. Within two years of coming into office in 1997, the Labour Government Foreign and Commonwealth Office—in collaboration, interestingly, with the Department of Trade and Industry—produced a booklet from the UK Railway Sector Group entitled, "Releasing the Power of Rail". That certainly did not criticise the Conservative party's privatisation of the railways. It is perhaps worth noting that the booklet was intended for overseas consumption, and not for consumption in this country.

Geoffrey Clifton-Brown: The Liberal Democrats are long on criticism but short on solutions. Since his party was so clever as to propose a not-for-profit company in February, will he now tell us how the Liberal Democrats would lever in £30 billion of private money under such a not-for-profit company?

Don Foster: If the hon. Gentleman will be patient, I will come to that. I was critical of his party for failing to come up with any solutions, so it is clearly incumbent upon me to give some suggested solutions to the problem. I have every intention of doing so in a few minutes.

Andrew Mitchell: Will the hon. Gentleman give way?

Don Foster: No. I want to quote from the booklet, because it shows the problem that the Labour Government had in reaching a solution. The booklet, intended for overseas consumption, was hardly critical of privatisation when it said things such as:
	"Railways are back . . . Trains are cleaner, safer and often a good deal faster . . . There is new energy and enthusiasm in the industry."
	It even boasted, despite what it now says about fragmentation:
	"There are now 25 operating companies, instead of just one"
	and concluded:
	"The arrival of competition has produced a surge of talent and innovation."
	Therefore the problem was that there was a schizophrenia in attitudes to privatisation in the first term of a Labour Government.
	In the second term, after the general election, there still was not the glimmer of an intention, even by a new Secretary of State, to act. On February 14, when we produced the proposals that the hon. Member for Cotswold (Mr. Clifton–Brown) mentioned, my right hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy) had raised the proposals at Prime Minister's questions, and received from the Prime Minister the bizarre answer:
	"I do not know what the right hon. Gentleman means by a not-for-profit organisation".—[Official Report, 14 February 2001; Vol. 363, c. 308.]
	Obviously, that solution was not even a glimmer in the Government's eye at the time.
	Much later, in June, that solution was still not being planned—nothing was afoot—because the Department's press release No. 285, of 18 June, had an interesting heading: "Government Pledges Certainty to allow the Industry to tackle the tough job ahead on our railways" and the Secretary of State was quoted in it as saying:
	"So I am not going to embark on big structural changes. What the industry needs now is a period of stability and certainty so it can concentrate on the vital job of delivering safe, reliable services for passengers and freight."
	In July, as the situation continued to worsen, Liberal Democrat Members again made attempts to persuade the Secretary of State to push the not-for-profit model. On 3 July, at Department for Transport, Local Government and the Regions questions, I asked the Secretary of State:
	"Will he reconsider his decision to make no major structural changes and examine proposals for bringing the parts of Railtrack that directly"
	relate to running
	"the railways into a not-for-profit public interest company?"
	The Secretary of State had an opportunity to reply, and he did. He said, interestingly, that the proposals would require legislation; we have heard nothing about any need for legislation now. He then said of the proposals:
	"They would simply introduce paralysis into the system, when we want genuine improvements."—[Official Report, 3 July 2001; Vol. 371, c. 137.]
	In July, therefore, there was no intention to follow our proposals and yet, despite all that confusion, by 5 October the Secretary of State—and, presumably, the Prime Minister—had done a huge U-turn and decided to do so. The problem was that everything had to be done in such a rush that, effectively, the Secretary of State had to adopt the nuclear option approach, instead of taking the time, as we proposed in our document, to have discussions with Railtrack about that option—something that Railtrack's advisers proposed could be discussed with the Government as early as the middle of August.

John Redwood: Is it Liberal policy to give any compensation to either or both shareholders and bondholders? What is the Liberal party's estimate of the costs of strengthening the balance sheet, paying the current bills, sorting out the administration and giving the new not-for-profit company a strong enough foundation? Would it not be a very expensive matter?

Don Foster: I shall answer the second part of the right hon. Gentleman's question in a minute. In answer to the first part of the question, we have made it absolutely clear that we do not believe that any additional Government—that is, taxpayers'—money should be put into supporting the shareholders. We recognise absolutely that a significant value remains in those shares as a result of the assets that still remain available to them, and that matter is being discussed at present. However, as many hon. Members have said, people holding shares should be aware that their value can go down as well as up. Anyone who had followed the value of Railtrack shares over a long period would have seen exactly where they were heading; the graph shows it clearly.

Robert Syms: Will the hon. Gentleman give way?

Don Foster: No.
	However, if the Secretary of State had to rush into his decision, there is also some confusion as to precisely what that decision is. On 15 October, having said that he was going to try to make changes, he said:
	"We shall propose to the administrator that a private company limited by guarantee be established to take over Railtrack's responsibilities. Any operating surplus it makes will be reinvested in the railway network . . . As it would have no shareholders, we would remove the conflict between the need to increase shareholder value and the interests of rail passengers."—-[Official Report, 15 October 2001; Vol. 372, c. 955.]
	It is clear from that that the proposal was one that the Secretary of State was putting to the administrator. However, on 5 November, in an answer to his hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), he said:
	"Now we can move forward and put in place a structure whereby, because it will be a not-for-profit organisation, any operating surpluses can be used for the interests of the railway network."—[Official Report, 5 November 2001; Vol. 374, c. 24.]
	At that point, the Secretary of State is stating definitely what the structure will be. However, on 6 November, in his speech to the Confederation of British Industry, he said:
	"But the company limited by guarantee is only one possible model."
	There is considerable confusion, so I hope that the Minister who winds up the debate will provide a clear explanation. My understanding is that the administrator is entirely independent, and that it is for the independent administrator to decide whether or not to establish the model that both the Secretary of State and the Liberal Democrats want.

Chris Grayling: Will the hon. Gentleman make clear his party's policy on the not-for-profit company? He has said that he would not countenance compensation from the public purse being given to shareholders, but if he rolls back the clock to the summer, when his policy was to pursue that option, did he expect that the company's assets would be confiscated through an administration order, as the Government have done?

Don Foster: No. I am more than happy to share with the hon. Gentleman a copy of the document that has been publicly available since 14 November. It sets out three stages, the first and most sensible of which would have been to hold discussions with Railtrack. Given that that sector of its overall activities was making a huge loss, it is not unreasonable to suppose—as the company's advisers hinted during the August discussions with the Government—that the company might have wanted to pursue that option with the Government's support. The hon. Gentleman can read about the other stages.
	There is one other area in which the Secretary of State is guilty of causing some confusion. Just a few minutes ago, he intervened to remind the House that there are two separate organisations: Railtrack Group and Railtrack plc. He is absolutely right to say that the distinction between the two is crucial to understanding what happened.
	When I raised that specific issue during the discussion following the private notice question on 5 November, the Secretary of State replied:
	"Some of the confusion has been caused by the fact that there are two companies: Railtrack plc, which holds the licence to operate the network and which is in administration; and Railtrack Group, which is not in administration and is still run by the directors of Railtrack."—-[Official Report, 5 November 2001; Vol. 374, c. 24.]
	That is clear. The implication is that it is everyone else, not the Secretary of State, who is confused about the distinction between the two bodies. Yet in his statement to the House on 15 October, he made specific reference to Railtrack on no fewer than 30 separate occasions, on 29 of which he referred only to "Railtrack" and made no distinction between Railtrack plc and Railtrack Group. On only one occasion did he refer to Railtrack plc. Perhaps most significant of all is that part of the statement in which the right hon. Gentleman spoke about what was being put into administration. He said, not Railtrack plc, but
	"Railtrack was taken into administration because it was, or was likely to become, unable to pay its debts."—-[Official Report, 15 October 2001; Vol. 372, c. 955.]
	I do not accept that it is worth spending much time debating issues of who said what to whom and when. I genuinely believe, however, that the way in which the Secretary of State has handled the issue has led to some of the confusion. My biggest fear is that, because of the confusion, the new vehicle that the right hon. Gentleman hopes will be agreed by the administrator—the not- for-profit public interest company—may have real difficulty in attracting private investment. That is the key concern.
	The hon. Member for Cotswold asked me what the Liberal Democrats would do about this. We have always made it clear that we believe that a not-for-profit public interest company should be able to raise bonds, but those should be Government backed. The Government are creating huge problems for themselves because of their obsession with the public sector borrowing requirement. The only successful way to move forward is by the approach I have outlined.

Theresa May: I am grateful to the hon. Gentleman for giving way and for responding to my hon. Friend the Member for Cotswold (Mr. Clifton-Brown). The hon. Gentleman has just said that the bonds would be Government backed. Presumably, that means a Government guarantee. How big a guarantee would he expect them to give? Would it be for the full £34 billion?

Don Foster: The hon. Lady must consider the sums of money that would be required. As she is well aware, there are normally three ways to borrow money. The first is for the Government to borrow directly, which is the cheapest way and that is why a number of people want the complete renationalisation of Railtrack. The most expensive way is to borrow on the open market. The middle way—if one dare use that phrase—is to do it with Government guarantees. That would seem to be the most likely way to ensure that the money is produced.

Eric Pickles: How much?

Don Foster: The hon. Gentleman referred to the 1 per cent. and 2 per cent. returns that would be required in an earlier debate, so I will not go into that now.

Gerald Howarth: Will the hon. Gentleman give way?

Don Foster: No. I want to finish now as many other hon. Members want to speak.
	I end where I began. A great deal needs to be done to put right the problems on our railways. We should be debating not who said what to whom and when, but how we are to move forward with this new model for Railtrack: how to reduce fragmentation in our railways and find ways to put the track and trains together; how to get rid of the perverse penalty system; how to tackle the real problem of ridiculously high fares, which are some of the highest in the world; how to make more of our stations safer; and how to integrate trains and other forms of travel. Those are the questions in which the travelling public are interested. They want a safe, reliable and affordable railway and they want it quickly. Today's debate has not moved that on one iota.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. Before I call the next speaker I remind the House that a 12-minute limit on Back-Bench speeches applies from now on. I call the hon. Member for Weaver Vale (Mr. Hall).

Mike Hall: First, I offer my condolences to the families of those killed in the air crash in New York yesterday. It is right and proper for hon. Members to realise the gravity of that accident and to offer our condolences.
	I thank you, Mr. Deputy Speaker, for calling me to speak in a debate that has, ostensibly, been called by the Opposition to scrutinise the role of my right hon. Friend the Secretary of State for Transport, Local Government and the Regions in placing the administration order on Railtrack.
	We could look at the debate in a completely different light and see that it is a smokescreen intended by the Opposition to block out why we are debating the issue in the first place. It was the Conservative Government's privatisation of Railtrack that has left us where we are this afternoon.
	The start of the debate was interesting. The hon. Member for Maidenhead (Mrs. May) had the opportunity to explain Conservative party policy towards public transport in general and the railways in particular. She failed to do so and instead launched a personal attack on my right hon. Friend the Secretary of State. That attack was unwarranted. She did not make the case and, at the end of the debate, we will see clear support for his actions in the Lobby, which is right and proper.
	Clearly, the Tory party does not want to debate the failure of Railtrack because it was the architect of that failure. In 1993, the Conservatives were responsible for the legislation that paved the way for Railtrack and they proceeded with the flotation of the company on 20 May 1996.
	I am conscious of the fact that I have not spoken in the House for a while, but I have listened to an awful lot of debates. The Tories' contribution to this afternoon's debate qualifies them as a top candidate for the brass neck of the year award. The way in which they have broached the issue is breathtaking.

Eric Pickles: The hon. Gentleman is reading from a prepared speech.

Mike Hall: Of course I am. It is a long time since I have spoken in the House, and I am being careful about my remarks. Earlier today, I noticed that the hon. Gentleman was reading out his speech from the Dispatch Box in Westminster Hall.

Eric Pickles: There is no Dispatch Box in Westminster Hall.

Mike Hall: But the hon. Gentleman read out his speech.
	This is an interesting debate. Railtrack came to my right hon. Friend the Secretary of State and asked for a blank cheque to oversee the running of the company not just for this year, but for many years to come. It is interesting that a public company should come to the Government and say, "Please will you give us a blank cheque to cover our operations." It is not the Government's role to underwrite companies on the stock exchange, nor is it their role to give further subsidy to a company that has had so much Government money in the past five years that it should not have had to go to the High Court.

Chris Grayling: Will the hon. Gentleman give way?

Mike Hall: Not at the minute. If the hon. Gentleman will allow me, I will develop my argument. If I do not cover the point that he wishes to make, I am prepared to give way to him later.
	When the previous Government floated Railtrack on the stock exchange in 1996, it should have had a secure future. It had a valuable property portfolio and an annual guaranteed income stream of Government subsidy worth £1.8 billion. Why did it need to come to the Government after five years, during which it must have received £8 billion, to ask them to prevent it from being put in a position in which it might be trading insolvently and in which it was certainly unable to cover its costs.

Chris Grayling: Will the hon. Gentleman give way?

Mike Hall: Not just yet; the hon. Gentleman must be patient. If he catches your eye, Mr. Deputy Speaker, he may get the chance to speak. There is a time limit on this debate, and I am conscious that many Members want to participate in it.
	Railtrack ultimately failed because privatisation by John Major's Administration was a rushed, botched and incompetent exercise that failed to deliver value for money for taxpayers. Specifically, it gave shareholders confidence in an unsound company and left the travelling public saddled with an inefficient and unsafe railway network.

Geoffrey Clifton-Brown: The Government have had four years to sort it out.

Mike Hall: Things take time. If the privatisation had not been botched in the first place, we would not have needed to use so much public money to sustain that public limited company. Today, we have not had any apologies from the Opposition for the way in which they privatised Railtrack.

Matthew Green: Will the hon. Gentleman give way?

Mike Hall: Not at the moment.
	We should receive at least some apology from the Opposition for the way in which they dealt with privatisation and for putting the travelling public in a difficult position. Right from the start, the Tories' motivation for privatising Railtrack was not difficult to discern. It was not to maximise receipts for the Treasury or make sure that the travelling public had a safer or more efficient railway—as my right hon. Friend the Secretary of State said, they were motivated by pure party political dogma.
	I do not expect the House to take my word for that. I urge Members to read the twenty-fourth report of the Public Accounts Committee, from the 1998–99 session. The House will recall that Railtrack was floated on 20 May 1996, as I said, and shares were issued at £3.90. The offer was oversubscribed by 10 per cent. and the Government raised £1.9 billion from the sale. Like many preceding privatisations, the sale of Railtrack was characterised by the fact that the company was undervalued, shares were underpriced and taxpayers were ripped off. It is no wonder that the PAC said that Railtrack
	"had been undervalued and sold in haste".
	It is clear, even to the most partial observer in the Chamber, that the sale of Railtrack was not motivated by a desire to drive up standards in the railways, and certainly not by a desire to maximise profits for the Government—it was motivated by pure party political dogma.
	On 15 February 1999, in evidence to the Public Accounts Committee, Sir Richard Mottram, the permanent secretary at the Department of the Environment, Transport and the Regions, told the Committee that
	"in the political circumstances of that period, a 100 per cent. sale was required".
	The circumstances to which Sir Richard referred, as confirmed in the twenty-fourth report of the Public Accounts Committee, were that the Tory Government had decided to sell 100 per cent. of the shares in Railtrack because of the prospect of a Labour victory in the pending general election.
	I have no doubt that I am right. Sir Richard Mottram is a highly regarded, top-ranking civil servant. His evidence to the PAC was given impartially and provides irrefutable proof that Railtrack was privatised for political purposes. The report also confirms that the aim of privatising Railtrack was to give shareholders the best possible deal. The House will realise that the Tories failed to achieve that.
	At the time that Railtrack was privatised, it was described as having a secure and profitable income stream; a large asset base, including a substantial property portfolio; scope to reduce costs; and considerable investment potential. The Tory Government went even further and guaranteed the company an annual income of £1.8 billion, wiped off £1.4 billion of debts and offered the shareholders, in their first year, a return of 19 per cent. on their investment. Over the past five years, Railtrack has enjoyed about £8 billion of hard-earned taxpayers' cash, but in the same period the travelling public have suffered enduring delays in services, increased travel costs and misery at the hands of a privatised company.
	Anyone who has had the misfortune to travel on the west coast main line will confirm that the two major problems facing the line are that the track is totally inadequate and the signalling is in urgent need of modification and major investment. The west coast main line connects the north-west and Scotland to London. It is in a deplorable state. I cannot tell the House how much the economy of the north-west has lost as a result of the state of the line, but one thing is certain: because of the way in which Railtrack has handled its affairs, the prospect of the west coast main line being improved and upgraded under its stewardship has been no more than a pipe dream. The cost of that project has risen to more than £6 billion.

Chris Grayling: Will the hon. Gentleman give way?

Mike Hall: I give way to the hon. Gentleman, whom I have come across before.

Chris Grayling: The hon. Gentleman is presenting a black picture of Railtrack and its capabilities. If that is the case, why did his Government choose to make Railtrack the principal investment vehicle for their 10-year plan for rail?

Mike Hall: That is an important question. Railtrack was the company that owned the track at the time that the 10-year rail plan was introduced. It was not until the early part of this year that Railtrack told the Government that it was facing severe financial difficulties. That is the straightforward answer. It would have been stupid not to include in the 10-year plan the company that owned the track.
	I beat the Conservative candidate in Warrington, South by only 191 votes in 1992. The hon. Gentleman fought the seat in 1997 and lost to my hon. Friend the Member for Warrington, South (Helen Southworth)—[Interruption.] I had not gone on the chicken run by then.
	How could a company like Railtrack find itself in such financial difficulty? With all that public money, why could it not invest in the rail and provide a brighter future for people who travel on the railways? There are two possible answers: at the time of privatisation, either the then Government did not know the state of disrepair of the track, or they knew the state of disrepair but did not tell anybody. The investment problems that Railtrack has experienced since the Hatfield disaster have brought it to its present state. If the then Government sold Railtrack without knowing the state of the track, that is one thing, but if they knew about the state of the track and did not tell anybody, that is criminally deceptive. That question needs answering.
	The next question that needs answering is why, once Railtrack was a publicly owned company, it did not carry out an investigation into the state of the track to find out what liabilities it had taken on? It might then have been able to plan a way forward to prevent the position in which it now finds itself. It might have been able to put a plan into action to build, over time, a railway that was efficient and effective for people to travel on.
	I am not sure what the answer is, but one thing I know for sure is that Railtrack did not tell its shareholders about the state of the company when it went to see the Secretary of State to ask for more money. I am certain that it knew that it would find itself unable to meet its debts, and therefore went to the Secretary of State. He has made the right decision, which is why the Tory party is on the wrong side of the argument this afternoon. We must take forward Railtrack in administration, find a secure future for it and ensure that the travelling public are better looked after.

Kenneth Clarke: The Secretary of State was typically calm in the face of this afternoon's attack and the Back Benchers who came in to support him were extremely boisterous in that support. I am afraid that that merely arouses further my alarm about the future of the railways. I do not think that Labour Members appreciate just how much damage has been done. The blunders and behaviour of the Secretary of State will have lasting consequences which will be felt in more than one area.
	One important area, which we have debated this afternoon, is the damage done to shareholders' interests. It is plain that the Secretary of State remains unrepentant. I am sure that it will be further explored not only in this debate but by the Financial Services Authority and, in due course, by the courts. The way in which the Secretary of State has behaved would bring considerable retribution on anyone in the private sector involved in the affairs of a publicly quoted company who behaved in such a way towards the markets and the company's owner.
	The damage that is obviously not appreciated by the Secretary of State or by Labour Back Benchers is that done to the future prospects of the railways. We should remind ourselves that there is probably widespread agreement in the House that the dominant issue to be addressed is how we are to raise the vast amounts of investment required to modernise the railway system and provide the travelling public with what they require. There is a need for £35 billion of private investment, on top of which it is likely that a lot of public investment will be required. No one listening to this debate could appreciate that that statement is supposed to be agreed to by the Labour party with the same enthusiasm with which the Conservatives and Liberal Democrats endorse it.
	In order to raise huge amounts of private investment, it is extremely important that the markets respond to the appeal and that the investment should be delivered in good time—parts of the railway network are probably deteriorating as we speak. It should also be delivered at reasonable cost to the taxpayer and the travelling public who have, in part, to service the return on that investment, and it must be invested efficiently to provide high quality service delivery to the public.
	The Government have gone backwards on all those counts. The way in which they have treated Railtrack and handled the events of the past few weeks has gravely damaged the potential to raise that sum of money at all, let alone in time.

John Pugh: Will the right hon. and learned Gentleman give way?

Kenneth Clarke: No, because I am speaking to a strict time limit, otherwise I would do so with pleasure. I will touch on what the hon. Member for Bath (Mr. Foster) said in a few moments.
	The Secretary of State's behaviour—his whole demeanour as well as his argument—shows me that he has learned nothing whatever either from his short time in office in this particular post or from the fact that the Government have, in more than four years, made remarkably little progress towards their ambition of getting the required private investment into the railways.
	As the hon. Member for Bath said, the Secretary of State rushed into the decision. Looking at and listening to the Secretary of State, and it is the second time recently on this subject that I have done so, I think that he is enjoying it. I think that he thought that this would be a popular decision, which would play well with Labour Back Benchers. It is playing well with some of them, and I will come to that in a second—they will come to regret it.
	Railtrack had been so vilified by members of the Government and their supporters that the right hon. Gentleman thought that insolvency would be greeted as a kind of public service, because fat cats who had caused accidents were being dispatched. I suspect that he even rushed out his announcement to ensure that it was not stolen from him by someone such as the Chancellor of the Exchequer, trying to take the credit for an announcement that was very popular with old Labour or those who still have some vestige of old Labour instincts.
	The fact is that that instinct of the Secretary of State and of some of the hon. Members who have spoken is contrary to the Government's declared policy position. Since the moment when they came into office, the Government have never espoused the cause of renationalising the railways, because they know perfectly well that they have not the slightest prospect of raising the sums involved or of getting the quality of management that would be required if they ever reverted to a nationalised railway. Their policy is to make investment in the railways so attractive that it will continue to bring in the funds that are required.
	I am genuinely indebted to the hon. Member for Bath, as I was not previously aware of the pamphlet that the Government published in their first term extolling the virtues of privatisation as it had progressed thus far, two years into office. The pamphlet needs to be commended to people such as the hon. Member for Weaver Vale (Mr. Hall), who is responding in the way in which the Secretary of State wants his Back Benchers to respond. He made a speech that he could have made before 1997 or when he was fighting the election that year. He still thinks that the whole point is to vilify the privatisation process and to suggest that making profits out of private investment in railways causes accidents and reduces the level of service to the public. However, that is completely contrary to the direction in which the Government wish to go.
	As my hon. Friend the Member for Maidenhead (Mrs. May) pointed out, that argument is also completely contrary to the evidence and facts for the first two or three years. The Government's pamphlet was well supported by the evidence. Following privatisation, usage of the railway soared. Indeed, that turned out to be one of the problems, given the old-fashioned infrastructure. I think that passenger usage increased by about 35 per cent., although I am speaking from memory, for which I apologise. Freight usage increased by about 45 per cent., trains became more punctual and the safety record improved. Hence, the virtues of the approach were extolled to people overseas.
	The Labour party never quite learned from that and still has not done so. It was hostile to privatisation and it hankers to go back to more public sector control. I think that the Prime Minister and the Chancellor of the Exchequer have adopted the principles of privatisation and the private finance initiative, but, alas, their party has never done so. Indeed, even some of their Ministers have never really adopted those principles and do not approve of them.
	That is why the Secretary of State should be careful before he gets too happy about his fate this evening. He may have every confidence in the Government Whips or think that there are only small numbers in the Conservative party, and he may get favourable write-ups in sections of the press—however, no Cabinet Ministers are here. Understandably, there is no sign of the Prime Minister or the Chancellor of the Exchequer. If I were the Secretary of State, I would look out for them as soon as the first reshuffle occurs. I do not think they are pleased with his work, as something must be done to deliver improvement on the railways. That is meant to be the second-term duty of the Government, who say they want to deliver noticeable improvements in the quantity of public service, but, as hon. Members may gather, they have gone in the opposite direction and are gravely damaging the prospects of raising the private sector investment that they want.
	The Deputy Prime Minister followed exactly the same pattern when he was responsible for these matters in the previous Parliament. He was hostile to the people with whom he should have been working from the moment when he took over responsibility for the railways. He enjoyed any discomfiture on the part of the companies or those who were responsible for them. He was inclined to intervene too much and to encourage over-regulation, which was one of the factors that inhibited the progress of the privatised railway companies. Of course, he found the same problem—he was attacking the companies that were supposed to be raising the capital that was necessary to deliver the Government's policy.
	The actual disaster that hit the finances of all the privatised companies was the aftermath of the railway accidents. The Government ordered inquiries, whose results I accept. They discovered management errors of the sort that occur in all organisations. However, the Government were content to allow the conclusion to be drawn that privatisation was somehow causing the accidents. The politicisation of railway accidents quite obviously meant that the reaction to the Hatfield crash was wholly excessive. The whole network was closed down for months and the finances of Railtrack and the operating companies have never been able to recover from that blow. Yet sections of the Labour party rejoiced, because they thought that the reputation of privatisation was being damaged again by those consequences.
	The present Secretary of State, in his short time in office, has sought to make matters worse. The operating companies have been offered shorter franchises, which make it less likely that they will be able to raise the capital for more modern rolling stock. He has got rid of the people who should be helping him. He sacked—in effect—Sir Alastair Morton, with whom I worked on developing the private finance initiative—now the Government's policy—in the first place. Sir Alastair Morton is a very difficult man to work with; that is why I used to have him there. He has fear of no one—he gives Ministers his own opinion, and he gives their officials his own opinion.
	That was all wrong for new Labour, and the best public servant it had was sacked. He was replaced by other public servants who were also difficult. Tom Winsor, the Rail Regulator, is now at odds with the Government over his account of what happened. That is a matter of pure semantics, as my hon. Friend the Member for Maidstone said. [Hon. Members: "Maidenhead."] Yes; they are a little different. The idea is absurd that the independence of the regulator is intact, when a Secretary of State with a huge majority says that if the regulator seeks to intervene further, legislation will be passed to curb his powers. That was an absurd intervention on the powers of the regulator by the Secretary of State, designed to deliver his chosen objective—the closure of Railtrack.
	The Secretary of State has fallen out with all those people. He must have had a say in the choice of the directors of Railtrack, with whom he is now at war. That goes on. Now he wants to put a not-for-profit company, which he is unable to explain, in a position in which the same shareholders will come back to put up the money again and put themselves at the mercy of his behaviour again.
	I conclude with the point with which I began. I do not think that it has crossed the Secretary of State's mind to consider the damage that he has done to the future of the railways and to the service that is likely to be given to the travelling public.

Louise Ellman: It is wholly appropriate that the Conservatives have brought the issue of Railtrack to the Chamber today. A better use of their time and ours, however, would have been to debate the possibility of a public apology by the Conservatives for their botched privatisation of our rail system, and to debate constructive proposals on how we might restore a rail service that meets the needs of the travelling public whom the right hon. and learned Member for Rushcliffe (Mr. Clarke) mentioned. We certainly do not have such a service at the moment.
	Railtrack was, from the beginning, part of a botched privatisation. Some of my hon. Friends have already referred to the conclusions of the National Audit Office's report, and to the £6 billion shortfall in valuation between what was obtained and what was due to the public. Railtrack was part of a flawed system of privatisation that separated wheels from rail and fragmented the public transport rail system. Worse, Railtrack soaked up public subsidy as the beneficiary of at least £9 billion of taxpayers' money. It paid out £10 million to directors and £700 million to shareholders.

Eric Pickles: Will the hon. Lady give way?

Louise Ellman: I am sorry, but there are time constraints in this debate. I might give way later.
	In the uncontested petition made to the High Court by the Secretary of State, it was shown that the company had a projected deficit of £700 million by December, rising to an anticipated £1.7 billion by the end of March next year. Are the Conservatives seriously saying that the Government should have been prepared to give more to a company in such a financial state? It was eating up taxpayers' money and failing to deliver. It wanted unidentified amounts of money—open-ended cash supplies—and had predicted deficits that were not challenged in the petition to the High Court. To have done so would have been a dereliction of public duty.
	We should consider what Railtrack has failed to achieve. I will make particular reference to the west coast main line, because as hon. Members have said, that is an important issue, especially to the north-west region. The Transport Sub-Committee discussions made a number of things clear. They showed that, before Railtrack was placed in administration, discussions took place between Railtrack and Virgin, and that compensation to Virgin was considered because of Railtrack's failure to modernise the west coast main line as promised.
	During the Sub-Committee discussions, £300 million in compensation which Virgin thought was due to it from Railtrack was mentioned. Indeed, I have heard reference to larger sums. In addition, reference was made there and elsewhere to the fact that Virgin sought rail ticket price increases as part of the compensation package. Virgin considered that it had lost money because of the failure to modernise the west coast main line.
	It is surely absurd and unjust that travellers on the west coast main line are losing out because Railtrack, before going into administration, failed to deliver modernisation as promised. Individuals are losing out; the economy is losing out. The economy of the north-west, and that of other regions, has suffered a great deal because of that failure; but according to statements made by the chief executives of Railtrack and Virgin in the Sub-Committee, we have confirmation that the public purse was asked to compensate the privatised company for failure to deliver what the public were promised. That adds insult to injury.

Eric Pickles: Will the hon. Lady give way?

Louise Ellman: I may give way later.
	The travelling public have already lost out because modernisation did not take place as promised, and now they are being asked provide compensation. That is particularly galling for travellers from Liverpool.
	Owing to the privatised system and price rises inflicted by Virgin, some Liverpool-to-London services have increased in price by more than 100 per cent., and it is now impossible for anyone on such a service to get to London for less than £153 standard or £240 first class if they want to arrive before the afternoon. Liverpool is regenerating itself, but how can that be achieved if passengers face price increases of that order? They now hear that Virgin may increase saver ticket and other fares by 33 per cent. as part of the compensation package, because Railtrack failed to deliver.

Geoffrey Clifton-Brown: Will the hon. Lady explain how she can have confidence in her own Secretary of State levering in £34 billion of private finance, which will be needed if her constituents are to experience improvements in the London-to-Liverpool service and modernisation of the west coast main line?

Louise Ellman: My comments show how Railtrack, despite receiving large public subsidies, woefully failed to modernise the west coast main line. Instead of trying to cover up their bad record on rail privatisation, will the Conservatives suggest some positive ways forward? If they did so, I suggest that support from the private sector for investment would be forthcoming. However, Conservative Members are more concerned to cover up their misdeeds, mismanagement and incompetence than to look after the needs of the travelling public.
	Condemnation of Railtrack's management is easy to find. The evidence was clear in discussions that took place in the Select Committee over the past two weeks. Before that, the Select Committee's all-party report of March 2001 criticised Railtrack's performance in maintaining, renewing and developing the network, and described it as seriously inadequate. That criticism was supported by Conservatives on the Committee.
	Only last week, Tom Winsor, the Rail Regulator, told the Select Committee:
	"I believe that the company spent too long complaining about multiple stakeholder pressures and interfaces and failed to understand the simple realities of its business which are this: you do not neglect your assets and you are not hostile to your customers."
	I cannot think of a more damning indictment. Comments of that nature were also made, by implication, to the Select Committee by the Strategic Rail Authority, the Department and by others giving evidence, including by the chief executive of GNER. Again and again, we heard about a company that apparently had no interest in its customers. Indeed, according to the regulator, it was hostile to them.
	Our interest, however, must be in deeds rather than words. For the west coast main line, Railtrack simply failed to deliver. One privatised company is now seeking compensation from the Government, and fares have been put up for already hard-pressed travellers because the privatised Railtrack failed to deliver. I cannot think of a more damning indictment of a privatised industry.

Eric Pickles: Will the hon. Lady give way?

Louise Ellman: I am sorry, but I have only two minutes left.
	We must now look to the future and consider what to do. I applaud the decision taken by the Secretary of State. It is appropriate that questions be asked about procedures and legalities, and questioning on those issues will continue at tomorrow's meeting of the Select Committee. However, it would be more appropriate if Conservative Members faced up to their failings of the past and, instead of continuing their dogged adherence to failed privatisation, accepted that rail privatisation was wrong. It was not in the interests of the taxpayer or of the travelling public, and I ask them to join Labour Members in seeking a constructive way forward, in which we have once again a rail service run in the interests of the travelling public.

Brian Mawhinney: The essence of this debate on the handling of the Secretary of State's decisions relating to Railtrack is best summed up by the fact that he could not even stay to listen to what was said about his behaviour, and has already fled the Chamber. I wanted to start by finding some common ground with him, although I admit that I shall go on to be critical thereafter.
	I share the Secretary of State's unhappiness about the quality of Railtrack management over the past few years. Had the Conservatives been in government, we would have taken a similarly jaundiced view of some of the decisions and behaviour of the Railtrack board. Mr. Corbett has a lot to answer for.
	The giveaway in the Secretary of State's speech was how frequently he had to resort to the partisan and ideological instincts of his Back Benchers. We have seen that in the House for generations; it is not a new instinct, but it is always a reflection of a Minister who is in trouble. That is what we heard today.
	The Secretary of State was all injured innocence. He could not understand what the fuss was about, but the truth is that he has form. Some time ago, he told the nation about a conversation that he had with the chairman of BMW, and the chairman of BMW said, "It ain't so." He tells the nation about a conversation with the chairman of Railtrack and the chairman of Railtrack says, "It ain't so." He tells the nation of a conversation with the Rail Regulator and the Rail Regulator says, "It ain't so." It reminds me of that old saying, "Everybody's out of step except our Johnny"—everyone knows the meaning of that.
	I dealt with the Rail Regulator. We had a series of meetings during my 11 months as Secretary of State for Transport. We recognised our individual responsibilities. We showed respect for each other's responsibilities. Neither I nor any of my Secretary of State colleagues ever threatened to take away the independence of the regulator if he did not do what we wanted him to do, or thought should be done.
	We have now got to the point where, following the Rail Regulator's evidence—I am not getting into semantics, either—the chief executive of Railtrack has, I am told, talked on the record about the possibility of legal action against the Secretary of State for "malfeasance in public policy". The House should not underestimate the seriousness of that charge. Whether he is proven in a court to be guilty or not, the damage is done to Railtrack and indeed to the Secretary of State by the very raising of that charge. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was right, as he so frequently is. The Government do not understand that the Rail Regulator is one of the guarantors of the confidence of the City and the private sector in putting money into organisations such as that. The damage will be enormous.

Kelvin Hopkins: Will the right hon. Gentleman give way?

Brian Mawhinney: No. There is only a limited amount of time.
	Talking of the City, I remind the House of another comment that the Secretary of State has made in the Chamber on two or three occasions recently. It was one of the few things that my hon. Friend the Member for Maidenhead (Mrs. May) did not mention. He has repeatedly told the House that he has had discussions with people in the City and that they were all enthusiastic about putting more money into private finance initiative and public-private partnership projects.
	Those of us who have had some experience found that a bit incredible, but there was no evidence to contradict the Secretary of State until I opened yesterday's Evening Standard and read:
	"The Institutional Shareholders' Committee, which represents every investing body in the City . . . suggested there was a clear legal case for pursuing the Government over its handling of Railtrack.
	The ISC also called on Bank of England Governor Sir Edward George to intervene in the situation to prevent lasting damage in relations between the City and the Government.
	The committee states that it has written to Sir Edward 'to explain its concern over the need for a stable and productive relation between the Government and the City'".
	Listen to this:
	"It says the letter 'urges the Governor to use his good offices to promote a solution that alleviates this concern and will allow the City to continue financing projects of vital importance to this country'".
	The City is telling the Governor of the Bank of England that, unless he finds a solution to the dispute between the Government and the City, the City will not invest in Government projects. That is not what the Secretary of State has told the House repeatedly.

John Spellar: Will the right hon. Gentleman give way?

Brian Mawhinney: I will not. The right hon. Gentleman will have time to respond at the end of the debate.
	Yet again, the Secretary of State is saying one thing in here which is being disputed outside. Johnny still seems to be out of step.
	I turn to the question that the Secretary of State did not answer. He was asked repeatedly whether he consulted the Treasury before the decision of 5 October. Indeed, he patronised my hon. Friend the Member for Lichfield (Michael Fabricant) by telling him that he did not understand what he was asking because he had never been in government. Well, I have. I believe the Secretary of State when he says that he signed the documents on 5 October. I do not believe the Secretary of State when he says that the decision was made on 5 October. I shall tell the House what the Minister for Transport knows to be true, although he will not say it at the Dispatch Box. Because transport is one of the big spending programmes, the relationship between transport, the Treasury and No. 10 is extremely close.
	My private office talked to the private office of the Chancellor of the Exchequer and the private office of the Prime Minister regularly. My senior officials talked to senior officials in the Treasury and in No. 10 regularly. The idea that I as Secretary of State would have made such a decision without its having been talked about and cleared by the Chancellor and the Prime Minister is bunkum—plain, ordinary, common or garden, copper- bottomed bunkum. That is why the Secretary of State would not answer the question this afternoon, though it was put to him repeatedly. The truth is that he signed the paper on 5 October, but the decision was made primarily by the Chancellor and the Prime Minister some time in advance. They said to the Secretary of State, "Go out and handle it."
	My right hon. and learned Friend the Member for Rushcliffe was not always the easiest Chancellor for a Secretary of State for Transport to relate to, but my guess is that he was a jolly sight easier to relate to than the present Chancellor. If he would not have allowed me to make that decision, I do not think that the present Chancellor and the present Prime Minister would have allowed the Secretary of State to float off freely and on his own behalf, without reference to anyone, to make a decision and to announce it to the world. If the House thinks that that is what happened, it is more gullible than I know it to be. All that sums up the indictment of this debate, from which the Secretary of State has fled.
	I accept that the Secretary of State is unlikely to take advice from me, but I would like to offer him three pieces of advice in a spirit of co-operation. First, he should get back to the positive and constructive things that he said about the railways when he first took office, before he understood the massive damage that his predecessor the Deputy Prime Minister had done to the rail network. He started well. Indeed, if he is not too embarrassed to admit it, he will even tell the House that one or two of us told him privately that we were encouraged by the start that he had made. He should get back to that frame of mind.
	Secondly, the Secretary of State should work extremely hard to extricate the railways from the political football stadium in which he has placed them, which was demonstrated yet again by his speech today. Some of us who are keen to see an effective railway system might be more willing to respond positively to trying to help establish the railway system if it were done in a much less partisan and politically driven way.
	Thirdly, the Secretary of State is in the Cabinet. He is a grown-up in political terms. As a grown-up in political terms, he should understand that what counts is not the volume of applause behind him or the vitriol of those in front of him. He will be measured by his effect on the railways. He has damaged them almost beyond repair. It is now time that he tried to redeem some of that damage.

Richard Burden: As one who experiences the joys of the west coast main line most weeks, the issue of how to get our railway system up to scratch is of some importance to me. As one who represents a midlands constituency, I know that the future of our railway system is a far more important matter than whether my train gets to London on time. Establishing a rational structure in our rail industry is critical to the economic health of the region that I represent. As my hon. Friends the Members for Weaver Vale (Mr. Hall) and for Liverpool, Riverside (Mrs. Ellman) said, a rational structure is also vital to the north-west.
	The issues and decisions that my right hon. Friend the Secretary of State has faced in the past few months are enormously important, and I believe that the public expect them to be treated as such by politicians of all colours. The public expect us to get our priorities right. Although I did not agree with many of the comments of the right hon. and learned Member for Rushcliffe (Mr. Clarke), I think that he was at least attempting, certainly in parts of his speech, to address some of the real issues facing the rail industry.
	If the public saw how Opposition Front Benchers have approached this debate, I would be surprised if they thought that the Opposition were getting their priorities right. The public know that, when Conservative Members privatised the railways, the theory was that the rigours of the market mechanism, with its winners and losers, would lead to service improvements. Many hon. Members were not convinced by that theory, and polls at the time suggested that the public were not convinced. However, the subsequent management failures and incompetence have exceeded the expectations of even the most cynical of us.
	If the public were not convinced when the railways were privatised, they will be even less convinced that Conservative Members have their priorities right now or that they have the interests of the travelling public at heart. Conservative Members seem to be concerned most about the losses sustained by shareholders because of the operation of the very market mechanism that they introduced. Although no one wants shareholders to lose money, Conservative Members need to say clearly, as I hope they will in reply to this debate, whether they believe that the off-setting of shareholders' losses should be the priority call on public funds, ahead even of investing the same sums in improving services.
	If Conservative Members are arguing that they would not have got into this situation, they have to say whether they would have written a blank cheque to Railtrack. If they would not have done so, what would have been the upper limit to their support?
	Getting our railway system up to scratch will cost money, and it will be expensive regardless of which party is in government. We have to face that fact. The key point is that we have to be confident that the structure by which investment is delivered has the interests of the travelling public, our industry and our economy as its first priority and not somewhere down the list.
	Conservative Members initiated this debate not to discuss priorities or the railways, but to try to get at the Secretary of State. Last week, the shadow Secretary of State said—it has been repeated by the Leader of the Opposition and, today, by the right hon. Member for North-West Cambridgeshire (Sir B. Mawhinney)—that the Secretary of State has "form". In alleging that, they have attempted to draw parallels between the way in which he has handled Railtrack and his handling of the Rover crisis last year, when he was at the Department of Trade and Industry. As I was pretty close to last year's events, if there are parallels to be drawn, I should like to share a few of my own recollections that are relevant to today's debate.
	I recall that within 24 hours of BMW making that appalling announcement, the Secretary of State was in the region talking to BMW and the unions, and getting involved right from the word go. I recall that when most industry experts and Opposition Front Benchers were saying that Rover was finished and thousands of job losses were inevitable, he was one of the few people saying that we should try to find another way. I recall that when he acted in that manner he was attacked for interfering and meddling, much as Opposition Front Benchers have been trying to attack him today on Railtrack. However, were it not for his interference and that of a few other people, 20,000 jobs would not have been saved and MG Rover would not be the successful company that it is today. If parallels are to be drawn, my right hon. Friend's "form" bodes rather well for his handling of Railtrack.
	My right hon. Friend is, of course, not the only one with form, and there are other parallels to be drawn between last year's events at Rover and this year's events at Railtrack. One is very clear. Last year, when thousands of jobs were at stake at Rover, the Opposition's priority was not to work out how to defend the jobs or to get the company back on its feet, but to engage in endless public tittle-tattle about who said what to whom and when they said it. Scoring party political points, both then and today, was and is not a means to the end of illustrating a serious political alternative; they have been seen by Conservative Members as an end in themselves. Scoring party political points is the precise purpose of today's Opposition day debate.
	Despite Conservative Members' crocodile tears and everything that they say about investor confidence, I think that no one would be more pleased than them if their words and this debate further damaged investor confidence. Their objective is to score points, not to deal with the matter.
	There are huge issues facing our railway service, including how to provide it with the necessary investment. There are huge issues about finding the right structure to deliver the interests of the travelling public and ensure that Great Britain has a railway service of which it can be proud. If we are to have a debate on those issues, we need a different approach from the Opposition. They had no credibility last year when they tried to discuss the car industry, and they have no credibility this year as they try to talk about Railtrack.

John Redwood: I have declared my interests in the register.
	The Secretary of State finds himself in a dreadful situation. I echo the comments of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) and my right hon. Friend the Member for North-West Cambridgeshire (Sir B. Mawhinney), who spoke with considerable experience, about how much more costly it is now going to be to sort out the problems of our railway industry, how much delay there will be in sorting them out and how much confidence this Secretary of State, on behalf of this Government, has knocked out of the relationship between the Government and financiers, bank managers, bond financiers and those who raise equity money.
	It is right for people to ask what the Opposition would do. I am very happy to suggest what could be done in this situation, as it is clearly well beyond the skills and attention of the Secretary of State. The legal position, as I understand it, is that the shareholders of Railtrack, at group level, retain residual assets. They must make their own decisions on whether they wish to continue trading those assets in some form or sell them and rescue what little money they can from the group assets that are not in administration. They also have a clear interest in the administrator obtaining best value, if he can secure value, for the assets in administration. That is also the legal duty with which the administrator is charged.
	The Secretary of State is not in control of that process, nor should he be. Those are assets that have been placed into administrative receivership and now have to be sorted out as best they can by the administrator. The sooner that they are sold on to an owner who can do something with them and set about rebuilding the battered balance sheet, the better it will be.
	The Secretary of State is in danger, I think, of misleading his own Back Benchers. He implies that his model of the not-for-profit company is the one that will naturally emerge from the administration process. That is by no means clear. Labour Back Benchers may be disappointed to discover that bids are received, and they may be even more disappointed if one or other of them is better than any bid that can be put forward by the not-for-profit company. We still do not know who will sponsor the not-for-profit company, how it will write a prospectus, how it will raise cash, who will serve on it and what type of guarantees it or other bidders will receive from the Government.
	I hope that the Government are in no doubt that they will have to offer fair funding to any bidders. They should, of course, first apologise for the mess that they have created, but the only sensible course that they can then follow is to state clearly to Parliament and the public, for the first time, what money is available to those who will be charged with the duty of running the Railtrack assets. Bidders will then be able to bid on the basis of greater certainty, and to ascribe a negative or positive value to the assets that are in administration. I fear that, in their current shape, the assets have a negative value, and that a substantial dowry will be required by whoever takes them on.
	It is obvious that Railtrack's balance sheet must be strengthened. In answer to one of my questions, the Secretary of State said that he hoped that the new company would have an A credit rating. There is no way that Railtrack, on paper, could command such a rating in its current guise. I would expect the balance sheet to require a sum well above £1 billion of additional equity, or surrogate equity, which I think is the Secretary of State's preferred route. He cannot quite bring himself to admit that he must inject new extra capital into a company whose shareholders he has just helped to bankrupt, but he will have to put in that equity, or surrogate equity, of well over £1 billion to give it any chance of securing some kind of credit rating in the City.
	The Secretary of State seemed to know that on 3 July, when, in rejecting the idea of the not-for-profit public interest company that had been suggested by some Members, he told the House that it would cost £2 billion to buy out the shareholders—we know that he does not wish to do that now—and another £4 billion to sort out the bond holders, because there is that amount of bond finance in Railtrack. When I asked him today, in the House, whether he proposed to wipe out the bond holders or whether he was effectively offering a Government guarantee for the £4 billion, he characteristically declined to answer; but the question is terribly important to assessing the cost to the Secretary of State of the forced administration of the Railtrack enterprise.
	Then there are the costs of the administration itself, which are likely to be high. Given the phenomenal legal bills that the Secretary of State and his advisers must be incurring, and those incurred by those advising the administrator, Railtrack and the regulator—many of which will be a charge on public funds—I suggest that there will be no change out of £100 million for the fees of lawyers, accountants and others involved in reporting on the progress of Railtrack, and the amount could escalate well beyond that. I should be delighted if the Minister intervened to assure me that the Government have received quotes for all those charges well in advance and the amount will be smaller, but I think that it would be safe to pencil in well over £100 million—something similar to the huge fees that the Government are running up in the public-private partnership negotiations in regard to London Underground, which remain stalled and mired in difficulty and uncertainty.
	There is also the cost control that the company itself was minded to implement, but that is probably not currently being implemented by the administrator. I estimate that at least £250 million of costs would have been saved in the trading year ending next March, and will probably not materialise because a degree of management has been removed from the company, and the administrator is taking things more easily in an attempt to find out what is there and how he can proceed.
	We then come to the £800 million that has already been guaranteed by the Government. That was squirrelled out by a question asked by someone else; I was not told, although I asked a direct question that should have required that answer. Anyway, we know that £800 million has already been guaranteed, or has gone, to deal with the day-to-day bills of the company in administration—and, given the cash forecasts that we have heard from the Secretary of State, presented by the company before he made his decision, there may be another £650 million to go out before the end of the year. I am sure that the Government will feel that they must guarantee that in some way.
	If we leave aside the £4 billion of bond holders' money—there are different ways of treating it, but according to the Secretary of State it should all be a direct charge on public accounts—we arrive at a total of £2.8 billion by the end of the year to try to keep the company going, and start sorting out the problems in administration. I suggest that that is well in excess of anything that the Government needed to give, or would have granted, to the company before it was put into receivership.
	I have asked the Secretary of State to tell the House how much would have gone into the company this year and next if plans had continued under the 2 April agreement, but I have received no answer. I think that Ministers should tell us how much they had planned to put in, both directly and through the Strategic Rail Authority; what the timing of the payments would have been; and what extra amount they estimated might be needed on top of that. I find it extraordinary that Ministers could sign off on a going-concern audit basis in the summer of this year, and a few weeks later be scrambling around saying that the company would become insolvent and something drastic would have to be done.
	My right hon. and learned Friend the Member for Rushcliffe made a more general point about the cost of this Secretary of State to the Government. Let us take just the transport element of private finance under the 10-year plan—£35 billion, perhaps £34 billion. If we assume that the cost of the Secretary of State's damage amounts to only an extra 1 per cent. per annum in interest to allow for the greater hazards involved in doing business with the Government now, we are talking about an extra £3.5 billion over a typical 10-year term of debt.
	That would be the extra cost of financing a programme of this size, and that is just one element. The Secretary of State will have to stand accused of increasing the costs of financing a number of Government programmes. The Government anticipated large sums of private money for other transport systems, health, educational establishments, prisons and a wide range of other public facilities. There is no doubt, given the City's current mood, that the price has just gone up. Some very smooth talking, and the removal of the Secretary of State, will be required to reassure people and put the price down again. [Laughter.] I am glad that the Government think that a matter for so much hilarity, but the public are not amused.
	This has meant a delay in vital investment in the railway industry. It has interrupted the progress of an industry that the Government themselves said was going rather better as a result of privatisation. Before the general election—in May, in Westminster Hall—the hon. Member for Streatham (Keith Hill), then a transport Minister, made a very good speech praising the growth in traffic, the improvement in investment and the new equipment that was coming to the railways—success that he believed had been achieved by the industry in privatised ownership since 1997. I found myself in full agreement with him. I did not confess that at the time because I knew that he had said those things because an election was coming up and he wanted to claim some credit for a Tory success a few years earlier. But I see that he is enjoying the situation now, because he knows that what he said was true, and that those who have taken over have made an awful mess. A new Secretary of State came in and overruled the perfectly sensible policy espoused by the hon. Gentleman and his then colleagues, causing the trouble that we are now seeing.
	Time does not permit me to say much more. Let me end by saying that this Secretary of State is going to send a huge bill to the travelling public, the taxpayer and the Government as a whole. It is a disgrace and he should go. We need someone who understands how the market works, and how to raise the colossal sums that we need to get the railways on the move.

Clive Efford: My right hon. Friend the Secretary of State was entirely right to take the public finance trough from under the Railtrack snout. His decision could be described as an admission of failure—failure to tame Railtrack, a monopoly created at the time of privatisation which separated track from trains. Since it was first created as a public body and later privatised, it has consistently failed to control its costs. More important was its failure to deliver on its obligation to provide an efficient and reliable network. The train operating companies will be relieved to know that their needs no longer have to play second fiddle to Railtrack's shareholders.
	Railtrack was created in April 1994, and questions about its finances have existed ever since. That continued after privatisation in May 1996, despite assurances given by the then Tory Government. In 1995, there was concern about Railtrack's ability to meet its financial investment targets. In September 1996, the Rail Regulator introduced the "Network Management Statement", intended to ensure that Railtrack fulfilled its investment commitments, especially in regard to maintenance. In November 1996, half-year figures showed that Railtrack was underspending on maintenance and renewals. The regulator stated that that was wholly unacceptable. He repeated that again in the following January at a meeting with the directors of Railtrack and, again, in a letter responding to Save Our Railways. He said in that letter:
	"As I said in December 1996 the current level of underspend"—
	on maintenance and renewals—
	"is wholly unacceptable."
	In May 1997, Railtrack published a further amended network management statement. The regulator responded by calling for greater public accountability from Railtrack and stated that he intended to alter its license to ensure that that was delivered. His statement acknowledged that Railtrack was a monopoly and that the regulator must provide a system of controls such as those that would be expected of a competitive market. After May 1997, the newly elected Labour Government announced their intention to introduce a new regime for the regulator to increase Railtrack's accountability.
	There have been repeated reports of Railtrack's failures throughout its history. Numerous newspaper articles have warned everybody about the dangers of investing in Railtrack. As early as June 1996, The Economist discussed "The Railtrack Trap" and the arrangements to finance Railtrack that were set up by the Railways Act 1993. On 21 December 1996, The Daily Telegraph contained an article called "Watchdog in Attack on Railtrack Underspend." The Financial Times ran a series of articles early in 1997 with headlines such as "Railtrack Warned to Speed up Investment" and "Railtrack Investment Row Gets Up Steam". There is a catalogue of reports of Railtrack's failures.
	We have had a constant stream of failures and attempts by the regulator and successive Governments to tame the Railtrack beast. However, all attempts failed because they tried to remould Railtrack into something that it was not set up to be. Public money was passed to private shareholders through a set up that was devised to do nothing but launder public money into private hands.
	In April 2001, Railtrack received an extra £1.5 billion from the Government. Immediately, Railtrack used nearly £200 million of that to pay dividends to shareholders. The public's anger about privatisation is underlined by the Paddington and Hatfield crashes, which epitomise the effect of privatisation on our rail network. The public have no doubt where the blame lies. They know that profit was put before safety. That was epitomised when the former chairman of Railtrack sat with his colleagues in his office on the night of the Hatfield crash and emerged at 6 am to state that he was the only man to see Railtrack through the crisis. A few weeks later, he was handed £400,000 and he went out through the back door. It is clear that Railtrack was not set up to run an efficient railway, but was set up with only shareholders in mind.
	On Second Reading of the Railways Bill in 1993, John McGregor, the then Secretary of State for Transport, said that the Bill was
	"an historic change for the better in Britain's railway system."—[Official Report, 2 February 1993; Vol. 218, c. 156.]
	He described Railtrack as an "entrenched monopoly" that had
	"an instinctive tendency to ask for more taxpayers' subsidy and to feel that public subsidy will always be there as a crutch whenever things look difficult. Inevitably public ownership also brings with it the constraints of public finance, not least given the many competing demands on the public purse."—[Official Report, 2 February 1993; Vol. 218, c. 156.]
	There is clearly not a competing demand on the public purse when public money is passed into private hands, but only when a public service is subsidised.
	Railtrack has given us constant excuses for its failures to deliver. The Railways Act 1993 paved the way for rail privatisation. The first mention of the possibility of Railtrack's privatisation was made only in October 1992. If Opposition Members do not believe me, I am referring to a House research document that states that the first reference that was ever made to Railtrack's privatisation occurred in that month. However, an Act that effectively privatised Railtrack had been passed by the end of November 1993.
	The reason for such undue haste is explained by a leaked memo from the then Chancellor, to which my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher), who is now Minister for the Environment, referred during an Opposition day debate on 18 October 1995. He said that the then Chancellor of the Exchequer wrote to the then Prime Minister to ask for Railtrack privatisation to be speeded up because it was
	"integral to the Budget arithmetic."—[Official Report, 18 October 1995; Vol. 264, c. 358.]
	We were treated to the Conservative Government's money-raising exercise to finance pre-election tax cuts. That is why Railtrack's privatisation was rushed and botched, and why we are debating the matter today.
	Tom Winsor offered Railtrack an interim review, as he stated when he gave evidence to the Select Committee on Transport, Local Government and the Regions last week. From 15 January, it was open to Railtrack to go back to Tom Winsor to ask for an interim review of charges to access railways. It failed to accept that offer until the weekend of the meeting with the Secretary of State, when it asked for that interim review to be carried out in 24 hours over a weekend. Opposition Members' entire argument appears to hinge on that single fact, which is a thin thread on which to charge the Secretary of State with misleading shareholders and mishandling the affair.
	My right hon. Friend the Secretary of State ended Railtrack's repeated failures. Public finances cannot continue to pour into the private sector at the expense of an efficient rail service. I support my right hon. Friend's actions, which I hope will lead to an efficient public rail service that the people of this country have the right to expect.

Anne McIntosh: I repeat, for the record, my declaration of interest. I hold shares in Railtrack, FirstGroup and Eurotunnel, and my husband works for an American airline company. Therefore, I share the sentiments of other hon. Members following yesterday's tragic plane crash and loss of life in New York.
	Today, we have seen a classic case of the manipulation of evidence. It is time that the record spoke for itself. I especially refer to paragraph 765 of the evidence given by the Rail Regulator to the Select Committee on Transport, Local Government and the Regions last week. He said:
	"I added that taking me under political control would go entirely against the grain of the major theme of the Government's policy position in the General Election campaign, which was about getting private sector capital into the provision of public services. I told them that such a step would do considerable harm to the ability of the Government to get companies to put money into public projects. I also mentioned the implications of the Human Rights Act 1968 because of the right of the citizen to have his civil rights determined by an impartial tribunal."
	That was against the background of the Rail Regulator stipulating in a press statement on 12 June that Railtrack had the environment to confound its critics and to succeed.
	The Rail Regulator told the Select Committee that when the Secretary of State told him that the Government had decided to put Railtrack into administration that weekend, he had said that he was
	"very surprised at the circumstances as they explained them to me and the suddenness of the decision on railway administration. I explained that we at ORR had had no indication of any imminent insolvency from the company."
	In paragraph 761, Mr. Winsor notes:
	"Mr Byers said that they had thought of that"—
	an interim application from Railtrack—
	"and that if such an application were made, he had the necessary authority immediately to introduce emergency legislation to entitle the Secretary of State to give instructions to the Regulator. After pausing to consider whether I had really heard what I had just heard, I asked whether that would be to over-rule me in an interim review or in relation to all my functions. Mr. Byers said that it would cover everything but that its first use would be in relation to an interim review which the Government did not want to proceed".

Louise Ellman: Will the hon. Lady give way?

Anne McIntosh: No, I will not.
	In the devastating evidence that Mr. Winsor shared with the Committee, he admitted his surprise at the suddenness of the Secretary of State's decision to put Railtrack into administration, at the fact that the company's financial situation could have deteriorated so badly in so short a time and that his office had no inkling of Railtrack's impending insolvency. Mr. Winsor explained to the Secretary of State that, in his view, Railtrack would exercise its right to apply for an interim review to keep it afloat.
	It is my firm belief, which the Secretary of State is free to contradict in the House, that he had effectively neutralised and neutered the power of the Office of the Rail Regulator, Mr. Tom Winsor, to process such an interim review. In fact, the Secretary of State had countermanded that application. He expected that Railtrack would make such an application and he fully intended to bring emergency legislation before the House to enable him to instruct the regulator.
	In that well-thought-out, well-prepared, swift move, the Secretary of State completely neutralised the Rail Regulator and blew his independence out of the water. The implications and ramifications of that move are enormous and deeply alarming, both to the House and outside, for Railtrack as a company, for its shareholders and especially for the Office of the Rail Regulator. Furthermore, there are implications for the regulation of other industries.
	The implications for the travelling public are clear. The question that the Secretary of State must answer in the House today, or perhaps tomorrow in the Select Committee, is: how can he give an assurance to train operators and investors that whatever the successor to Railtrack may be, it will be adequately funded and that that investment will be protected by an independent regulator?
	Successive sectors have used this model: energy, telecommunications and transport depend on the role of an independent regulator for the smooth operation of the industry and for the ultimate protection of the interests of shareholders.
	There are also ramifications for the public sector. Clause 24 of the NHS Reform and Health Care Professions Bill deals with the independent regulation of the health service and the reform of the General Medical Council, yet clause 25(2) provides—yet again—for power of direction to the Secretary of State to overrule the very independence of that regulator. That threatens the principle of the independence that the Bill is intended to create.
	The inadequacies of the Secretary of State are well rehearsed. His lapses of memory are only too familiar, but his poor record in this matter is noteworthy: for example, his decision not to award a 20-year franchise to GNER, against the clear advice of the Strategic Rail Authority. The Select Committee heard in evidence that neither the Secretary of State nor any of the Department's Ministers had tried to hold a meeting from the date that the right hon. Gentleman took office to the date of the announcement of Sir Alastair Morton's retirement. That meant that the two major applicants in that east coast main line renewal spent £4 million apiece—a total of £8 million—in promoting their bid. At present, that money is not recoverable.
	The cost of putting Railtrack into administration runs at £2 million a week—a cost to be met by the Government and thus the taxpayer. Following the demise of the independence of the Rail Regulator, one question remains to be answered. In the bidding for Railtrack—the new not for profit company, limited by guarantee—who will set the base line?
	The Secretary of State may care to answer that question this evening, but is he the man in whose hands the travelling public want to see the future of the railways? The answer is no, and I beg the right hon. Gentleman to consider his position.

Eric Pickles: Before I begin my speech, I wish to associate myself with the remarks of my hon. Friend the Member for Maidenhead (Mrs. May) and the Secretary of State for Transport, Local Government and the Regions about the people of New York who continue to suffer. We all admire their bravery.
	The debate got off to a marvellous start with my hon. Friend's speech. There were distinguished contributions from my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), my right hon. Friends the Members for North-West Cambridgeshire (Sir B. Mawhinney) and for Wokingham (Mr. Redwood), and my hon. Friend the Member for Vale of York (Miss McIntosh). We are grateful to her for all her hard work on the Select Committee, and especially for exposing the truth about these matters.
	It is a cause of regret to the Opposition that the Secretary of State has not seen fit to be in the Chamber much today, and in particular that he is not here for the winding-up speeches—[Interruption.] Ah, here he is! I am glad that he has made it; we can all be late.
	I have felt a little sorry for the right hon. Gentleman—[Interruption.] No, I have, because we have made history today. This is the first ever vote of no confidence in a member of the Cabinet and not a single member of the Cabinet thought fit to turn up to support the right hon. Gentleman. He said that he had sent a message to his colleagues: "Don't come today, you've got more important things to do." I am sure that we would all like to see that particular e-mail.
	We knew that the right hon. Gentleman was in trouble when he tried to present himself as a Gucci-suited class warrior, talking about the fat cats and reeling off sums of money—the many millions of pounds of bonuses—yet those sums pale into insignificance against the amount of extra interest that we shall all have to pay for our infrastructure projects because of the Secretary of State.
	The right hon. Gentleman failed to answer the principal question: on 5 October, when did he first receive the information from the Treasury that it was not prepared to fund Railtrack? On 5 October, did he receive information from the Treasury: "Well, basically Steven, do whatever you like. If you want to give it billions of pounds, we are right behind you"? I do not believe for one moment that the Treasury said that. The right hon. Gentleman should understand that, sooner or later, we will find out the date and that from that point on he will have been guilty of creating a false market in shares. Sooner or later, that date will come out—[Interruption.] In reply to the Whip, the hon. Member for Hove (Mr. Caplin), I am certainly on the side of the workers who have been robbed of their savings by the Government.
	As the Secretary of State is thought to be relying on his notes of 25 July, he has no alternative but to place them in the Library. We look forward to being able to study his version of the minutes. We have seen everyone else's minutes for that date, so we should see his.
	The right hon. Gentleman made a great statement that he did not feel that he threatened the regulator and that he should be acquitted of that. As one of my hon. Friends said, we do not think that the right hon. Gentleman is a physically imposing or intimidating person. Even if he took a dose of steroids, we would not find him very frightening—as might have been the case with his predecessor. We were interested in the substantive point of whether or not he had promised to produce legislation. We now know that he said that he would produce legislation.
	Let us be blunt with the right hon. Gentleman. He said no to the House when he should have said yes. At the very least, we should have received a qualified no. We completely accept that the right hon. Gentleman did not threaten the regulator. Instead, he chose the well-trodden path of the Corleone family, by making the regulator an offer he could not refuse. Railtrack is in administration because the Government refused to provide additional public money, as was their right. More importantly, Railtrack is in administration because other modes of finance were cut off by the Secretary of State. No one can save Railtrack because the Secretary of State was determined—

Hugh Bayley: Will the hon. Gentleman give way?

Eric Pickles: I will not give way to a part-time attender of the debate. The hon. Gentleman cannot expect to swan in at the beginning and then again at the end. I am not taking interventions from someone who has not had the courtesy to attend the debate. He can sit down.

Hugh Bayley: On a point of order, Mr. Deputy Speaker. The reason I left the Chamber after the hon. Member for Maidenhead (Mrs. May) had replied to my intervention was because she inadvertently misled the House. I have been to the Library to get the facts—

Mr. Deputy Speaker: Order. The hon. Gentleman has been here long enough to know that that is not a point of order. He must find other ways of pursuing matters of debate.

Eric Pickles: I am sure that the hon. Gentleman is a quicker speed reader than that.
	It is the same offer that the Government made to the court—

Hugh Bayley: Will the hon. Gentleman give way?

Mr. Deputy Speaker: Order. It is perfectly clear that the hon. Member for Brentwood and Ongar (Mr. Pickles) is not giving way.

Eric Pickles: I would give way to anybody who has attended the debate.
	It is the same offer that the Government made to the court. With the removal of the independent regulator, the company exists at the whim of the Secretary of State.

Louise Ellman: Is the hon. Gentleman suggesting that he would give additional funding to a company that has a predicted deficit of £700 million by December and £1.7 billion by next March—an uncontested allegation?

Eric Pickles: The hon. Lady earlier made great play of the west coast main line. On 8 October, the Secretary of State was due to receive from Railtrack a solution to that problem. When, in about 10 years' time, the hon. Lady is still receiving complaints from her electors, we will have to remind them that she supported a decision that meant that money for phase 2 of the west coast main line was not made available.
	There is a gap in the Secretary of State's story. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said that
	"frankly, there is a gap, but I don't know it is quite as artificial as anyone is making out."
	Given that the next capital project is to be the underground, perhaps the Government are realising that "mind the gap" might be a good way to remind themselves of how their capital projects are going.
	My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was right to ask where the missing £34 billion will come from. Most will rest on the back of 15 special purpose vehicles to create a mixture of public and private finance. Few have any realistic chance of getting off the ground in less than two or, more likely, four years, by which time the problems will be much worse. That means the delay or cancellation of projects. Goodbye west coast main line; goodbye Thameslink 2000; goodbye improvements on South Central. The result?—stagnation of the railways, low investment and fewer passengers.

Kelvin Hopkins: rose—

Eric Pickles: The hon. Gentleman has attended the debate so of course I will give way.

Kelvin Hopkins: I travel on Thameslink every day and I understand that Thameslink 2000 was to have been finished by 2000 under privatisation. Is that successful privatisation?

Eric Pickles: If the hon. Gentleman travels on Thameslink every day, he must realise that he will be later and later and that he will have to get up earlier to arrive in this Chamber. That will go on for years. I wish the hon. Gentleman many years in this Chamber, but I guarantee that when he retires, which I hope will be many years from now, he will have seen no improvement.
	There will be fewer passengers, less freight and higher fares; in other words, welcome back British Rail.

Hugh Bayley: Will the hon. Gentleman give way?

Eric Pickles: I have told the hon. Gentleman that he did not attend the debate and I am not satisfied by his explanation.
	We know that the senior civil servant within the Department said in a meeting with Credit Suisse First Boston in July that the movement towards a non-profit company was neither "appropriate nor attractive". We know that Mr. Winsor told the Select Committee that he warned the Secretary of State that this would affect public-private partnership deals. Hospitals, roads, railways and airports will all be affected, as my right hon. Friend the Member for Wokingham said.
	We all know that the next PPP deal will be the underground. Interest rates alone will cost an extra £10 million because of the incompetence of the Secretary of State. When we think about the number of hospitals and roads on top of that, we can appreciate the full extent. We know that Ministers have absolutely no interest in the shareholders or the employees of Railtrack. They realise that 92 per cent. of the employees of Railtrack own shares. Overnight, a grade 1 signaller took a pay cut of 9.4 per cent. For clerical staff, 6.1 per cent. of pay was taken away by the Government.
	Let one family speak for them all; a Mr. and Mrs. Byers. They are pensioners who invested £3,500 for their old age and nursing care. They have said that their lives are "absolutely ruined". I suspect that the right hon. Gentleman who bears the same name will also bear the responsibility for his career being ruined.
	We have read the views of an anonymous Minister, who is not here today, but who, I understand, is a member of the Cabinet. He told The Independent:
	"It's not Tony's style to bow to external pressure to get rid of a Minister but nor is it his style to keep a discredited one in the longer term. And, let's be honest, a Cabinet Minister's job is not as safe as a spin doctor's."
	The Secretary of State must realise that he represents the single greatest obstacle to investment in the railways. Let us put it simply. The City no longer trusts the Government and the public no longer trust their money with the Government. The Government now have the great task of raising the sums necessary for the railways, but they cannot do so with the Secretary of State at the helm. He must now go.

John Spellar: First, I wish to associate myself with the comments made by others regarding the tragedy in New York yesterday and the impact that that will have on the aviation industry and those who work in it, many of whom are our constituents.
	This has been an interesting debate—

Hugh Bayley: I am grateful to my right hon. Friend for allowing me the opportunity to intervene at this point. When I intervened on the hon. Member for Maidenhead (Mrs. May) to ask whether she believed that Railtrack had made a sufficient contribution to rail safety and the reliability of services in return for the money it received from the Government, she said that rail safety had improved since privatisation. The Library has provided me with figures showing that the number of fatalities grew from eight in the year prior to privatisation to 43—[Interruption.] It may be a laughing matter for Conservative Members, but it is not for the families of those who died. There has been a fivefold increase and if the hon. Lady looked at the brief from the Library—

Mr. Deputy Speaker: Order. Interventions must be brief, particularly at this stage of the debate.

John Spellar: My hon. Friend's point is well made.
	We were pleased to hear my hon. Friend the Member for Weaver Vale (Mr. Hall) gaining his voice, and I was pleased to hear my neighbouring colleague, my hon. Friend the Member for Birmingham, Northfield (Richard Burden), putting the record straight on Railtrack and BMW. [Interruption.]

Mr. Deputy Speaker: Order. The House should hear the winding-up speech in silence, which we have not had so far.

John Spellar: My hon. Friend the Member for Eltham (Clive Efford) ably represented, once again, a significant part of London's commuterland.
	There were one or two interesting revelations. The hon. Member for Brentwood and Ongar (Mr. Pickles) wished my hon. Friend the Member for Luton, North (Mr. Hopkins) a long period in the House, which shows an accurate reading of the opinion polls and the future prospects of the various parties. Alarmingly for those who sell hair dye, the hon. Member for Maidenhead revealed that she prefers mature men. There will be an instant reduction in the use of hair dyes and a great proliferation of grey hair around the Chamber in the coming days.
	The debate was also interesting for the fact that we have wasted half a day when there are so many other issues that could be discussed—issues on which, at business questions, Opposition Members have demanded debates. Last week, the hon. Member for South Holland and The Deepings (Mr. Hayes) asked for a debate on arable farmers, the hon. Member for Sutton Coldfield (Mr. Mitchell) for one on health, the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) for one on the House of Lords, and the hon. Member for Ruislip-Northwood (Mr. Wilkinson) for one on London. All those might have been more appropriate subjects—they are all important. The previous week, the right hon. and learned Member for Sleaford and North Hykeham asked for a debate on the Crown prerogative, the hon. Member for Bexhill and Battle (Mr. Barker) for one on civil defence and the right hon. Member for North–West Hampshire (Sir G. Young) for one on the economy. All those were more significant issues.
	An extremely interesting aspect of the debate was Opposition Members' failure to mention certain subjects. I heard precious little mention of passengers, of freight, or of the industry, but an awful lot of talk about a small section of the City—those who bought Railtrack shares recently, while others in the City were selling them those shares. That is a very small constituency—but it is the one to which the Conservative Opposition largely address themselves.
	Let us deal with the underlying facts. Railtrack did not oppose our petition to the High Court for administration because it recognised the strength of the case. Our evidence to that court showed a deficit for Railtrack of £700 million by 8 December, rising to £1.7 billion by March 2002. Faced with those facts, the court—not the Secretary of State—in the person of Mr. Justice Lightman, said:
	"this is clearly a case where the making of an order is not only appropriate but absolutely essential. I shall therefore make the order immediately."
	Therefore Railtrack, in its current form, was not part of the solution for our railways but a major problem, and a very expensive problem at that.
	During the debate, I was amazed by the cavalier way in which the Opposition treated public money. The right hon. and learned Member for Rushcliffe (Mr. Clarke), the hon. Member for Maidenhead and the right hon. Member for Wokingham (Mr. Redwood) all seemed to be quite easy about substantial but unspecified sums of public money being thrown around. The right hon. and learned Member for Rushcliffe—in a term used in the debate—has form in that. After all, during the time when he was Chancellor we nearly doubled the national debt.

Kenneth Clarke: As the right hon. Gentleman was listening to my speech, he will recall that I was concerned about the delay to future investment in the railways and the cost to future investment and the prospects of raising private investment, after all these incidents. Does he expect the west coast main line refurbishment to have made any worthwhile progress by the time of the next general election?

John Spellar: I am very glad that the right hon. and learned Gentleman raised the west coast main line, a project which Railtrack originally budgeted at £2.3 billion. It is now an estimated £7 billion and rising. Railtrack's total failure to control its costs—[Interruption.] I shall tell the right hon. and learned Gentleman, and the right hon. Member for North-West Cambridgeshire (Sir B. Mawhinney), about the attitude of the City of London. Both the Secretary of State and I have had many meetings with a range of financial institutions about the London underground and other areas, and they believe that those are good business prospects and are keen to be engaged in them. That is the reality, contrary to the scare stories that are being put around by the right hon. and learned Member for Rushcliffe and his colleagues.

John Redwood: rose—

John Spellar: If the right hon. Gentleman will wait a minute, I will come to him.
	The right hon. and learned Member for Rushcliffe is not alone. We also have some questions to pose to the hon. Member for Brentwood and Ongar and the right hon. Member for Wokingham, who talk a lot about compensation. I simply ask them, compensation to whom, compensation for what, and how much? We have heard about the loss of shareholder value. The value of the company decreased from some £9 billion at its peak to £1.5 billion even before the events we are discussing.
	I give way to the right hon. Member for Wokingham. I hope that he will now answer those questions: to whom, for what, and how much?

John Redwood: As the Minister should remember, I said that the cheapest option now was to sell the assets back to the private sector and to have limited but agreed funding. Does the Minister agree that that is the best answer or is he effectively going to renationalise, and, if so, how big will the massive bill be?

John Spellar: The right hon. Gentleman has totally failed to answer the questions that I asked him. The administrator will have to examine the assets within Railtrack and that assessment will determine the value that is realisable for the Railtrack shareholders. The question that I posed to the right hon. Gentleman, and which none of his colleagues has answered, is how much public money would they put in to pay the shareholders? That is the question that they must answer, and they have not answered it tonight.
	During the debate, much weight has been placed on the comments of Tom Winsor. My colleague and hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) ably quoted some of the evidence about more recent events. However, let us consider what Tom Winsor said about Railtrack—the company that is obviously the jewel in the Tories crown, the apple of their eye. In his speech of 12 June, just after the Secretary of State and I entered our current posts, he said:
	"I believe the answer is found in the mistakes of a rushed privatisation with too many corners cut, weak regulation and a company which squandered its skills base whilst neglecting the condition of its physical assets. And it did not happen suddenly.
	The seeds of Railtrack's present predicament—and that of the whole railway industry—were sown in 1993-7"—
	who was the transport Minister during part of that time?—
	"when the industry was being restructured and prepared for privatisation. In those years, time and again, when there was a choice between protecting the public interest and promoting proceeds of privatisation, the latter was given a higher priority. The theory was—if there was one at all—that Railtrack would be responsive and competent, and would see its own interests coinciding with those of its customers and public interest . . .
	Railtrack pursued an agenda which, in too many respects, left the dependent customer in the lurch. It sometimes appeared that it mattered more that Railtrack was the darling of the City of London rather than a supplier"—

Gregory Barker: rose—

Chris Grayling: rose—

John Spellar: It is Opposition Members who have been quoting the Rail Regulator with such approval throughout the debate, so I am surprised that they are so concerned when I quote other words of the Rail Regulator, many of which he reiterated in his evidence to the Select Committee.

Chris Grayling: rose—

John Spellar: I will not give way.
	Finally, the Rail Regulator said—illustrating well the on-going problems that there had been with the company—
	"The company should put away the begging bowl, and stop spending valuable management time hawking themselves unwanted round Whitehall, and knuckle down to getting train services back to a sustainable level of reliability and quality of service."
	We certainly did not hear much from the prosecution—the official Opposition. What we did hear certainly was not Perry Mason. I have just quoted a devastating indictment of a failed company, brought about by a political action by a previous Government. What this second debate on Railtrack has shown is history repeating itself as farce—and boring, repetitious farce at that. What was new this evening was not relevant and what was relevant was not new.
	It is a shame that we do not have a procedure in the House for recording no confidence in Her Majesty's Opposition. I therefore have no hesitation tonight in being equally repetitious and repeating my closing remarks in the debate a fortnight ago.
	The general elections of 1997 and 2001 showed that the voters believed that the Tories were not fit for government. Once again today, they have shown that they are not even fit to be the Opposition.

Question put, That the original words stand part of the Question:—
	The House divided: Ayes 152, Noes 394.

Question accordingly negatived.
	Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
	The House divided: Ayes 335, Noes 193.

Question accordingly agreed to.
	Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
	Resolved,
	That this House recognises that many of the problems of the railways stem from the years of underfunding of the industry by the previous Conservative Government and the shambles of their rushed and ideologically driven privatisation of Railtrack; welcomes the decisive action that Ministers have taken in regard to Railtrack which will be welcomed by the travelling public; congratulates the Government for developing contingency plans for the industry as soon as it was told of the company's plight; rejects the policies of the Opposition, who would have offered the company a blank cheque and even now wish to pay over £1bn to compensate shareholders; and welcomes the work of Ministers in developing positive policies to take the industry forward in terms of a successor to Railtrack and to put the interests of passengers first.

Stakeholder Pensions

Mr. Deputy Speaker: We now come to the second debate, on the Government's stakeholder pension scheme. I should announce to the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

David Willetts: I beg to move,
	That this House regrets the Government's failure to deliver stakeholder pensions to its target group of 'those with moderate incomes of between £10,000 and £20,000 a year'; condemns the failure to reform the obligation to purchase an annuity at age 75, which is a disincentive to taking out stakeholders and other forms of personal pension; regrets the spread of means-testing which acts as a disincentive to saving; condemns the burdens on company pension schemes which are causing employers to close them to new members; and calls on the Government to review its pension policies so as to reverse the decline in funded pensions.
	The purpose of this debate is to hold the Government to account for a policy launched in their election manifesto of 1997 on a new form of personal pensions—stakeholder pensions—known in the trade as genetically modified personal pensions. They were legislated for in 1999 and, of course, they were launched in April 2001. Stakeholder pensions have now been available and marketed for more than six months and it is time to hold the Government to account for the delivery of promises that they made when they were pushing their legislation through the House.
	I shall briefly remind the House of what the Government promised. The target group for stakeholder pensions are the 5 million people on low and middle incomes who do not have a pension. Lord Rooker, the former Minister of State, said:
	"Our estimate of the target group of five million people for stakeholder pension schemes is based on the number of people earning between around £10,000 and £20,000 who are not in an occupational pension scheme."—[Official Report, 10 April 2000; Vol. 348, c. 25W.]
	So the target was the 5 million people with modest earnings who did not have pension provision. How successful are the Government in addressing that target group and ensuring that they take out stakeholder pensions? We know—not, I am afraid, from the Government's statistics, but from the Association of British Insurers—that 416,000 stakeholder pensions have already been sold; a modest but useful figure one might think, until one looks in a bit more detail at who those 416,000 people are.
	We know that 160,000 people have transferred out of the construction industry pension scheme, which is already in operation. The biggest single move into stakeholder pensions has been by the construction industry, from another form of pension provision, which accounts for approximately 160,000 of the 416,000 pensions sold. We are therefore left with about 250,000 people who have taken out stakeholder pensions; perhaps they are in the Government's target group for the new pension provision. Again, the ABI estimates that approximately half the people taking out stakeholder pensions already have private pension provision above the minimum contracted-out level. They may be people who are transferring from some other form of funded pension scheme, or they may be taking the benefits of concurrency. However, it looks as if about 125,000 of the 250,000 people who are moving into a stakeholder pensions already have some form of pension provision. They are not the target group, which consists of people who do not already have a pension.
	We are left with 125,000 people. How are the Government doing with them? The total may be a bit smaller, but at least 125,000 members of the target group have taken out stakeholder pensions. The Government said that stakeholders were aimed at people with modest earnings; perhaps they have overachieved on that. We know that approximately 25 per cent. of stakeholder pensions have been taken out by individuals with incomes of less than £7,500 or no income at all. Who are they? We have all been reading the financial pages of our newspapers, so we know that they are the non-working wives of people who have been well advised that the pension is a useful tax relief—

Maria Eagle: It is wives, is it?

David Willetts: Yes, by and large, it is usually non-working wives. They appear to make up another 25 per cent. of the people who have taken out stakeholders, and account for another 62,000 pensions.
	Perhaps the Government have at least managed to issue stakeholder pensions to 62,000 people in their target group. However, that is not the end of the story, because there is another group. We know that 15 per cent. of stakeholder pensions have been taken out on behalf of children, usually by their grandparents, accounting for another 37,000 pensions. In fact, a generous assessment of how the Government are doing is that they have managed to issue, perhaps, 37,000 stakeholder pensions to their target group of 5 million. Mr. John Jory of Building and Civil Engineering Insurance, the company which is selling stakeholder pensions to people in the construction industry, said:
	"we are probably the only provider selling to the target market."
	It may be that nobody else is selling to the target group. I suspect that the number of stakeholder pensions sold by the Government to the target group may be lower than the number of life peers created by the Prime Minister—248 at the last count and, of course, rising fast. We want to hear from the Minister tonight what he has been doing to meet his target of 5 million people who do not have funded pensions, which is the target group for stakeholder pensions.
	What have the Government been doing? First, as we would expect from them, they have been spinning—redefining the target group. There has been an elaborate debate about whether the target group are people on low to moderate earnings, or on moderate to high earnings. I will not detain the House with the various prevarications of the Secretary of State and his colleagues about that. Suffice it to say that we can at least be clear, because it has been said time and again, and it is the basis on which the state second pension is constructed, that the target group are those with incomes of £10,000 to £20,000 a year who do not have an occupational pension.
	It is no good the Government spinning themselves out of trouble by claiming that that is not the target group. They have regularly identified it as the target group. The Government will be spinning for the rest of their life. "Spinning their way out of trouble" will be their epitaph, but it will not do.
	The other great recourse of a Labour Government in trouble is to an advertising campaign. It cost £6.5 million—three times as much as the entire Department of Social Security advertising budget in the previous year. The Government have tried to tempt people from the target group into stakeholder pensions by increasing awareness of them. I congratulate the Secretary of State. His advertising campaign has clearly worked. The Government have succeeded. During the period of the advertising campaign, between February and June 2001, people's awareness of stakeholder pensions rose by 15 per cent. That was, in part at least, because of the Government's advertising campaign.
	Good news, so far, but there has been one problem: the more people have grown aware of stakeholder pensions as a result of the Government's advertising campaign, the more confused they have become about pensions in general. The IFA promotion chief executive, David Elms, said:
	"The worrying trend is that as people are becoming increasingly aware of stakeholder pensions, they are becoming more and more bewildered."
	The only thing the advertising campaign has succeeded in doing is making people more confused about stakeholders and pensions than they were before it started. There has been a 10 per cent. increase in the number of people who describe themselves as being in the dark about retirement planning since the Government's advertising campaign began, so the only effect of the campaign has been to spread more confusion about the best way of saving for a pension.
	I want the Secretary of State to offer the House this evening an account of who is buying stakeholder pensions, whether that is compatible with the Government's objective for the target group, and what he will do to meet the objectives that he has laid before the House for the marketing of stakeholder pensions.
	Why have stakeholder pensions proved such an extraordinary flop, after all the publicity, the expenditure on advertising, and the effort that the Government have put in over the past five years? I suggest that there are three reasons. The first is that as means testing spreads further and further up the income scale, fewer and fewer people can be confident that they will be better off if they have a stakeholder pension.
	We hear from the Government Benches all the time about the problems of pensions mis-selling, but it would be mis-selling a stakeholder pension if people took one out, perhaps saving out of their modest earnings, and at the end of the day found that they were hardly better off, despite having put aside a few thousand pounds of their hard-earned savings. We have repeatedly asked Ministers to answer the $64,000 question: how much money do people need to have in a stakeholder pension fund in order to be confident that the money that they will receive when they retire will float them above means-tested benefits? The answer could well be $64,000. It could be more than that, but we have never had a figure from Ministers. That is why they run the risk of mis-selling their own stakeholder pension.
	The Institute for Fiscal Studies warned that
	"the increase in the rate of the minimum income guarantee over the next few years will unambiguously discourage saving."
	The Secretary of State has a problem of his own creation as he spreads means testing up the income scale.
	Secondly, the Government have imposed new taxes on funded pensions. They have increased the burden of taxation on people who save for their retirement. The Prime Minister told the House last year that we should not worry about the burden of extra taxation. He said that
	"because of rises in the stock market since the election, those sums"—
	the sums that we were quoting for the increase in taxation—
	"are entirely illusory."—[Official Report, 1 November 2000; Vol. 355, c. 704.]
	However, the sums that we were quoting for the cost of those tax increases were very real. It was the stock market gains that the Prime Minister claimed in defence of his policy that were illusory. It is no good the Government saying that they want to encourage people into funded pensions, if they then tax them more heavily.
	The third way the Government have made the problem worse is by failing to respond to the widespread demand from all parts of the House, to be expressed in a private Member's Bill promoted by my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), for reform of annuity law. The present position, whereby someone is obliged to buy an annuity at the age of 75, is a further disincentive to people taking out a stakeholder pension or other forms of personal pension provision. For many people, the obligation to purchase an annuity at the age of 75 is an extremely unattractive proposition. There are proposals on the table to tackle that. It is a source of genuine amazement to me that the Government have still not acted on a manifest problem.

Richard Ottaway: Is not the problem the fact that the Budget Book states that the Government are engaged in discussion and in reviews and analysis of the situation, yet Ministers make it clear that they have no intention of making any progress? We have one half of Government disagreeing with the other half.

David Willetts: My hon. Friend is right. The Government have set out an objective for more funded pension provision, an objective which I wholeheartedly endorse. One of the Secretary of State's own documents states:
	"Currently about 60 per cent. of total spending comes from the State and 40 per cent. from the private sector. Over time, we expect this balance to change so that 40 per cent. will come from the State and 60 per cent. from the private sector."
	What does "over time" mean? How long will we have to wait to achieve that? Is the right hon. Gentleman taking any steps towards the achievement of that objective? The danger is that we are going in the opposite direction. The danger is that in Britain, after years of success in building up funded pensions, we may now be going backwards.
	The gentleman who has just become the chairman of the National Association of Pension Funds says that stakeholders may force pension take-up down. He says that pension provision may fall with the introduction of stakeholders, if one of the effects of stakeholders is that people can move into inferior pension provision compared with what they currently have.
	Marks and Spencer Financial Services has warned of this in its "Stakeholder Barometer", which states:
	"Only a quarter, 27 per cent., of companies planning to set up stakeholder pension schemes will contribute to an employee's pension, with the remaining 73 per cent. just offering access. This is in stark contrast to the existing situation where more than half, 52 per cent., of the employers with a group personal pension set up already, have decided to actively contribute to some or all of the pensions set up by their employees."
	That is hard evidence which I hope the Secretary of State will take into account.
	The danger is not only that are we failing to make any progress towards the objective shared in all parts of the House of more funded pension provision relative to state provision; the danger is that we may be going backwards.

Paul Flynn: One policy project is to change a decision made by the Government that the hon. Gentleman supported on annuities at the age of 75. What will be his Government's policy, if they are elected at some future date? Will they abolish the stakeholder pension, or will they reform it? If they reform it, how will they do so?

David Willetts: We are in favour of encouraging more funded pension provision. The purpose of the debate tonight is to establish what the Government are doing to meet their objectives for funded pension provision. I observe around the world a fascinating debate on how to encourage more funded pension provision. Our last manifesto contained proposals on that to encourage people to build up a funded alternative to the basic state pension, and on annuities. I support the initiative to simplify the regime for the regulation of pensions. I do not want to embarrass the right hon. Member for Birkenhead (Mr. Field), but his ideas for encouraging more funded pension provision are the sort of thing that we should be considering. Why are the Government doing nothing whatever to encourage more funded pension provision?
	In an attempt to persuade the Minister for Pensions in particular of the power of our arguments, I refer the right hon. Gentleman to the notification that came across my desk of a conference which took place last week entitled "China's Pension System: Crisis and Challenge", on how China should move towards more funded pensions—[Interruption.] No, I am afraid I did not go.
	For the Minister's benefit in particular I quote a resolution of the third plenary session of the 14th central committee of the Communist party of China calling for more funded pensions. It calls for the integration of
	"social pooling with individual accounts"
	for funded pensions. We have now reached the stage where throughout the world there is a more radical debate about moving to more funded pensions than the Government are willing to tolerate in Britain.

Roger Casale: Will the hon. Gentleman give way?

David Willetts: No, I want to come rapidly to a conclusion because many other hon. Members wish to speak.
	Throughout the world there is a debate about how to encourage more funded pension provision, an objective to which the Government have signed up. Why are they completely failing to meet their objectives?

Lynne Jones: If the hon. Gentleman wants to encourage more people in the target earning group of £10,000 to £20,000 a year to take out funded pension schemes, what policies would he introduce to ensure that they are not caught in the means-tested trap which would make them little better off?

David Willetts: One of the policies that we proposed at the last election was to enable people to build up bigger pension pots by making it possible to opt out from the basic state pension, which would increase their chance to build up a fund that would be worth so much that they would be floated off means-tested benefits.
	I want to quote three organisations that have put clearly the points that we have tried to make this evening. First, Age Concern says that the crucial question is:
	"Will stakeholder pensions ensure the delivery of an adequate retirement income for people on lower income levels? On current information, Age Concern believes they are not on course to deliver."
	Does the Secretary of State disagree with Age Concern? Nick Timmins, writing in the Financial Times, said:
	"The Government's pension policy is in a mess . . . makes the present course look increasingly unsustainable . . . something in the current arrangements is going to have to give."
	From the Secretary of State's own side comes the friendly fire of the Institute for Public Policy Research, which says:
	"There is concern from a number of quarters . . . that the government's strategy is unravelling."
	It refers to
	"doubts about Stakeholder pensions reaching their target group"
	suggesting the need for a reassessment.
	Tonight we ask the Secretary of State to come clean with the House about the take-up of stakeholder pensions and the reasons why they are manifestly failing to reach the target group who he has repeatedly assured the House are the people he expects to take out stakeholder pensions. In addition, we ask him to reflect on the fact that one of our nation's achievements was to build up more funded pensions as a proportion of our national income than just about any other advanced western country. That great achievement is now being frittered away, and stakeholder pensions are the latest example of that failure.

Alistair Darling: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	'welcomes the Government's reformed framework for pensions, which ensures that today's pensioners share in the country's rising prosperity and that tomorrow's pensioners are encouraged to save for their retirement, building on the foundation of the basic state pension; believes that pensioner poverty must be tackled through the minimum income guarantee; supports the reform of SERPS to create the State Second Pension which will give more help to low paid earners and people with broken work records, such as carers and disabled people; further supports stakeholder pensions which provide a low cost, flexible option for moderate or higher earners who do not have access to a good occupational scheme; welcomes the Government's plans to ensure that pensioners with modest savings or a small occupational pension are rewarded for their thrift through the new pension credit; and supports the need for an effective system of financial regulation through the FSA and other measures to build public confidence.'.
	I listened to the hon. Member for Havant (Mr. Willetts) make his second speech in the House since the general election. It is the second speech in which he has spoken at some length without at any point saying what his alternative approach might be, in this case on pension reform. I take with a pinch of salt his criticism of our policies. He is in the unusual position of having, in the previous Parliament, been responsible for not just one but two failed pension policies.
	In May 2000, the Conservative party announced that it would get rid of the winter fuel payment and the free television licence, referring to them as gimmicks. In September 2000, the Conservatives said that they would consolidate the Government's "gimmicks" and redirect their savings into the basic state pension.
	That is interesting because, when it comes to consistency, which is important in pension planning, I see from the Conservative party's website that its policy is to keep the winter fuel allowance and other special payments. It says:
	"We would keep the Winter Fuel Allowance, free TV licences and the Christmas Bonus. And we would extend payments to people in care homes, to over 75s without a TV and to pensioners abroad."
	Having moved from scrapping those gimmicks, they will now pay winter fuel payments to pensioners who live abroad and give free television licences to pensioners without televisions. That appears to be the sum total of the Conservatives' present policy.
	The hon. Gentleman also referred to his second policy—it too encountered some difficulty during the election campaign—to scrap the basic state pension and encourage young people to opt out of it into a funded pension—[Interruption.] Conservative Members should be aware of the policies on which they fought the last election.
	The difficulty is that the pension policy on which the hon. Gentleman fought the last election would have resulted in a young man having to save £10 a week from the age of 16 just to buy back the basic state pension that the Conservatives had taken away. The other difficulty, which is where the Conservatives got into real trouble at the election, is that the policy of moving everybody into a funded pension would have given rise to a black hole of some £6 billion. During the election campaign, they could not say where they could find that money, which is why, I think in week two, they stopped talking about their pension policy altogether.
	The only thing that seems to have survived—at the moment anyway—is their savings policy, referred to in the motion, where 85 per cent. of the gain goes to the richest 20 per cent. of Conservatives. That should not be a surprise; nothing much has changed there.
	I intend to deal with all the points that the hon. Gentleman made, but when we talk about the pension reforms that we put in place we have to bear in mind the problems that we encountered when we took office.

James Clappison: The right hon. Gentleman should be ashamed.

Alistair Darling: The hon. Gentleman talks about shame, but he should reflect on what we had to clear up. There was the mis-selling of pensions, which cost the industry millions of pounds. Hundreds of thousands of people lost out as a result of what the Conservative Government did. They halved the value of the state earnings related pension scheme and presided over a growing gap between the poorest pensioners and those who were better off. They left 2 million pensioners in poverty and did nothing to help the low paid or those in part-time work. They did nothing for disabled people and nothing for women to enable them to save for their pension. They failed to plan for the future. Moreover, critical to the subject we are debating tonight, they left a system riddled with disincentives so that those who did save for their retirement saw no advantage from their thrift and effort. That is what we inherited and what we had to clear up.

Gregory Barker: Is it not the case that the right hon. Gentleman inherited a substantially larger savings ratio than the one that prevails now, that savings under this Government have utterly collapsed, and that the Government have no credible policy to return to anything like the savings ratio that they inherited?

Alistair Darling: The savings ratio was at its lowest level ever in 1991, when the hon. Gentleman's party was in government.
	I should like now to set out for the House the changes that we have made to pension policy for those on low incomes and also for those on moderate and high incomes. Our reforms are based on the clear principle that those who can save have a clear responsibility to do so. Yes, we want to get more people into funded pensions. In return, we need to ensure that the Government support those who cannot afford to save. Here we part company with the Conservative party, because we do not think that low-paid people should be put into funded pensions, because they are not good value for them. We also want to ensure that when people save for their retirement, they are rewarded for their thrift, and that the pension system is properly regulated and supervised so that we avoid the mis-selling problems that arose under the previous Government.
	For today's pensioners, our first priority is to tackle the pensioner poverty that we inherited. More than 2 million pensioners live in poverty. In that respect, I want to deal with the first point made by the hon. Member for Havant, which he has also made on other occasions. When he speaks about means-testing, he makes clear over and over again his distaste for it, but he does not say what he would introduce in its place. The fact is that the only way of tackling poverty and getting more money to the people who need it most is to identify pensioners on low incomes. It is impossible to do that without an assessment of income, unless one takes the view that a universal increase should be given to everyone to take care of those on the lowest incomes. I do not believe that that is Conservative party policy today or that it will be at any time in future.

George Osborne: The Secretary of State speaks about targeting help. When Lord Rooker, a former social security Minister, was a Member of this House, he clearly identified the target group for stakeholder pensions, to which my hon. Friend the Member for Havant (Mr. Willetts) referred. How many of the 416,000 stakeholder pensions have gone to people in the target group? Will he answer the question?

Alistair Darling: I shall deal further with stakeholder pensions in a moment. I thought that the hon. Gentleman might have been able to tell us the answer as to what exactly the Conservatives' policy is towards those poorer pensioners. Of course, Opposition Members do not like talking about poor pensioners, because they did nothing to help them tackle poverty in all the time they were in office. Indeed, when they were in government, they expected a single pensioner to live on £68 a week. Today, the same pensioners, under our policy, get £92 a week, which is £18 more than the Conservatives gave them.

Paul Goodman: Will the right hon. Gentleman give way?

Alistair Darling: No, not just now.
	When the Conservative party says that it is against means-testing, it really means that it is against a policy that resulted in Britain's poorest pensioners getting, in some cases, £18 a week more than they would have received under a Conservative Government. That is what the Tories oppose.

Paul Goodman: Will the right hon. Gentleman give way?

Alistair Darling: No, I shall not do so just now. If the hon. Gentleman is patient, I might just give way to him at some stage later. However, if he stands up again in the immediate future, I shall not do so.
	If the Conservative party is going to maintain its line that it is against means-testing, which presumably means that it would get rid of it, the inevitable conclusion must be that it would end up taking away money from some of the poorest pensioners in this country—pensioners who, for one reason or another, did not or could not save enough for their retirement. The difference between us and the Tories is clear. When they were in power, a pensioner aged between 60 and 74 was expected to live on £68.80 a week. Today, that same pensioner gets £18 more. I am more than happy to defend that policy on any occasion, because I cannot see how pensioner poverty can be tackled other than by ensuring that money goes to those pensioners who need it most.
	In the past few months—and, indeed, over the past couple of years—we have heard time and again criticisms from the Conservatives about our policy, but they have never once referred to their alternative. Given all the criticism that they make, we can only assume that they would remove the minimum income guarantee, which would mean that a large number of pensioners would be substantially worse off if the Conservatives were ever returned to office. This is not the first occasion when the Government have talked about pensioners on low incomes, but there has been absolute silence on the Conservative Benches, because they have nothing to say.
	I now turn to the policies that we have put in place and to the long-term reforms that are designed to ensure that we encourage additional saving by people who can afford it—people on moderate and higher earnings, who, as I have said before, should be encouraged to save for their retirement. We have a twin-track approach. We believe that those on lower incomes are better off in state provision. [Interruption.] It is said that that is all right, then—a comment that was made rather smugly, if I may say so.
	As I said, there is a big difference between the two parties. I believe that it is wrong for people on low incomes to go into funded pensions and I do not believe that any political party should encourage them to do so. Such pensions are not good value for people on low incomes. That is why we reformed the state earnings- related pension scheme and replaced it with the state second pension. After the changes that we have made, some 18 million people on low earnings, including those who are disabled or have taken career breaks, can get an increased pension. Again, the Conservatives did nothing about that during the 18 years they were in government.
	Our policy for people on low earnings is first to deal with pensioner poverty today through the minimum income guarantee. For people of working age who are likely to be on low earnings or who are on career breaks, the state second pension will mean that far more help is given than they would ever before have received. We do not believe that people in that position should be encouraged to opt for funded pensions, because they would lose much of their contribution through administrative costs. I cannot believe that it is a sensible policy to force people on low earnings into funded pensions, although it is a policy that the Conservatives, at least, adopted at the election.
	As I said, we believe that those on moderate and higher earnings should be in funded pensions, so we have sought to expand the choices that are available in the funded sector. That is why we launched the stakeholder pension: to give a choice to people who could not access occupational pensions or who were on personal private pensions, but for whom such pensions were inappropriate. That is why stakeholder pensions were introduced.
	Reference has been made to the target, but it is clearly set out in the pensions Green Paper that was published in December 1998. It contains numerous references to the targets, and the target group is people on moderate and higher earnings. That is printed in the document in black and white for anybody who cares to see it. The target has not changed one jot since the pensions were launched.

Several hon. Members: rose—

Alistair Darling: I shall certainly give way to the Conservatives who are now desperate to intervene, but I want first to put something to them. I see that the right hon. Member for Hitchin and Harpenden (Mr. Lilley) is in his place. I remain confused about the Conservative attitude to stakeholder pensions. The hon. Member for Havant, who now speaks for the Opposition on these matters, was vague, but in February this year, the right hon. Member for Hitchin and Harpenden gave an informative interview in the Financial Adviser, a splendid publication with which I am sure all hon. Members who are present are familiar. He said:
	"I would be more than surprised if a future Tory government even contemplated abolishing stakeholder pensions".
	He went on to say:
	"Stakeholder pensions should give savers more bang for their buck. Savers should see less of their contributions absorbed by costs and more being invested in assets which, other things being equal, will mean higher pensions when they retire."
	On this occasion, I could not disagree with him.

Peter Lilley: rose—

Alistair Darling: As I have mentioned the right hon. Gentleman, I shall give way to him, after which I shall come to the other Opposition Members who wish to intervene.

Peter Lilley: The right hon. Gentleman is correct that, before stakeholder pensions were introduced, I expressed my hope that they would be a success. I did so because I would like any measure that is designed to increase private funded provision for pensioners to succeed. He did not, however, mention that I expressed my fear that stakeholder pensions would, at best, make a small contribution to increasing funded provision and that, at worst, they would undermine that provision. Have his assiduous officials drawn his attention to my remarks to the same audience a few days ago, in which I expressed my disappointment that stakeholder pensions had been such a flop and my belief that, in the light of that lack of success, the only way in which the Government could make them work would be to move to compulsion? Will he confirm that that is now on his agenda?

Alistair Darling: I appreciate that Conservative Members sometimes have to perform heroic acrobatic feats to get from what they said at one point to what they now wish to say. The framework and design of stakeholder pensions were very clear when the right hon. Gentleman gave his interview earlier this year, and at no point did he say anything other than that he would be surprised if the Tories ever sought to get rid of them. He was extremely complimentary.

Peter Lilley: Will the right hon. Gentleman give way?

Alistair Darling: No, please let me finish. I have just read out what I believe to be an accurate quote of what the right hon. Gentleman said. He may not like it, but that is what I have done. I have not quoted what he said three days ago, because I have not seen what he said three days ago.

Peter Lilley: Will the right hon. Gentleman give way?

Alistair Darling: I will not give way to the right hon. Gentleman now, but I will in a moment because he obviously feels very strongly about this. I have quoted what he said in his interview with the Financial Adviser and, no matter what he is now trying to do, he was extremely complimentary about stakeholder pensions a few months ago. I am bound to wonder what has changed now. He is clearly embarrassing his own Front Benchers.

Peter Lilley: In the article in the Financial Adviser in February, I also said:
	"I have emphasised the danger that the introduction of stakeholder pensions may undermine existing company defined benefits schemes, accelerate the pace of closures and lead to mis-buying by members leaving such schemes . . . even reducing overall pension provision."

Alistair Darling: One day, I am sure that we shall have plenty of time to go through the right hon. Gentleman's entire interview, and all his speeches during his life and times here. He does not disagree with a word that I quoted from the Financial Adviser, so I am afraid that he cannot get away with that.
	Stakeholder pensions are filling a crucial gap in the market. They are good value. The 1 per cent. cap on management fees is now being reflected across other pension products.

Several hon. Members: rose—

Alistair Darling: I have promised that I shall give way in a moment.
	Stakeholder pensions are portable, and can be taken from job to job. That is important when one recalls that the average worker now moves employer six times. People are flexible; they do not need to be earning to benefit. If people take career breaks, they ought to be able to contribute. They also allow people to contribute to a stakeholder and to an occupational scheme.
	Given that the Government's—and, I think, the Opposition's—objective is to encourage people to save for their retirement, it is encouraging that, over the past few months, the sales of pensions in general, as well as stakeholder pensions in particular, have been extremely buoyant. More people are taking out pensions. Some of that may be attributable to advertising; I do not know. The advertising was general, not geared to one particular product. The evidence is that more people have been taking out pension products in the last few months.
	The impact of stakeholder pensions, in relation to the cap on administrative charges and the other features, such as their flexibility and portability, that make them more attractive, will now and in the longer term have a wholly beneficial effect on the pensions industry. I will now give way to the hon. Member for Wycombe (Mr. Goodman), as he has been straining at the leash for so long.

Paul Goodman: I am very grateful to the Secretary of State for giving way. Will he now answer directly the question put to him by my hon. Friend the Member for Tatton (Mr. Osborne)? How many of the 416,000 stakeholder pensions sold have been sold to people in the target group?

Alistair Darling: Some 400,000 stakeholder pensions have been sold. Frankly, nobody is in a position, at this stage, to say who exactly has bought them. Nobody knows that yet. I make that point because I am now beginning to see why Conservative Members have called this debate now, rather than in a few months' time, when there might be further evidence. This product has been on the market for just over six months. Pensions are not something that people just go out and buy on a whim; they think about it, and take time to build up to it.
	There is an analogy here with individual savings accounts. I remember Conservative Members saying that ISAs would not take off, and that they would not be sold. In fact, what happened was that, after a slow start, sales of ISAs increased year by year. To be fair, exactly the same thing happened with PEPs and TESSAs; it took some time before they became extremely popular. That is not uncommon in financial products.
	I understand that the professor who speaks for the Liberal Democrats—the hon. Member for Northavon (Mr. Webb)—has some research that he is going to tell the House about shortly. I am sure that he has been a professor for a long time; I notice that his name is now prefaced with that title. No doubt he will tell us exactly what that research shows.
	At this early stage, we know that more than 400,000 stakeholder pensions have been bought. I am sure that that figure will increase over time, but at the moment there is no empirical research to show exactly who has bought them. It is more important to consider the amount of money that has been invested in pensions this year. Investment in all forms of pensions has increased by some 50 per cent., which is a significant part of our drive to increase the number of people holding funded pensions.

Mark Prisk: Given the Secretary of State's confidence in the potential success of these schemes, will he rule out the need to make them compulsory in future?

Alistair Darling: I did not realise that the Conservatives' policy was further to extend compulsion. The hon. Gentleman wants to rule it out, while the right hon. Member for Hitchin and Harpenden wants to rule it in. It is worth bearing it in mind that it is compulsory, at the moment, for anyone who is employed to contribute to a pension scheme—either to the state second pension or to a funded pension, if the individual contracts out.
	Stakeholder pensions are new on the market; they have been on the market for just six months, and it is encouraging that some 400,000 have been sold. If there are people who were in personal private pensions who should not have been, and who transfer to stakeholder pensions because they find them better value, I shall not criticise that. Some people may be in pension schemes that close down or change, and they may go into stakeholder pensions. That is precisely why we developed stakeholder pensions: to ensure that those options were there. As for the idea that we should criticise people who start making pension or savings provision for their children or grandchildren, I thought that that was something that the Conservatives used to encourage. Now they seem to be condemning it.

Lynne Jones: Will my right hon. Friend give way?

Alistair Darling: I will give way in a moment.
	One has to remember that, in the last few months, the sale of pensions has increased by some 55 per cent., the sale of single premium pensions is up by some 192 per cent., and group personal pension sales are up. One also has to bear it in mind that, last year, the overall amount contributed to non-state pensions was the highest ever—a real-terms increase of some £19 billion since we came to power in 1997. What we are seeing in the funded pension sector is encouraging, and it is wholly in line with our stated aim in the Green Paper to encourage more people to take out funded pensions.

Lynne Jones: rose—

David Willetts: rose—

Alistair Darling: I shall give way to my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones), and then come back to the hon. Member for Havant.

Lynne Jones: Is not my right hon. Friend concerned at the evidence that many of the people taking out stakeholder pensions are among the most affluent? They are benefiting from generous tax reliefs of up to £792 a year at the basic rate and more at the higher rates, while people in the target group cannot afford to take out pensions or, if they do, are scarcely better off. I understand him not wanting to take lessons on pensions from the Conservatives, but will he listen more closely to groups such as the pensions provision group and the Institute for Public Policy Research, which has said that it is looking into the subject of pensions and that the Government's policy is in danger of unravelling? Will he study its report when it is produced early in the new year?

Alistair Darling: The report has not yet been produced. I have spoken to the IPPR, as my hon. Friend might imagine. My answer to her is exactly the same as the answer that I gave to Conservative Members. At this stage, we know that just over 400,000 stakeholder pensions have been sold, but nobody is yet in a position to give an accurate breakdown of who exactly has bought them. In any event, to judge stakeholder pensions or any other financial product after only six months would be fraught with difficulties. It is not possible to reach a judgment after a very short period.
	It is not surprising that people who are transferring from personal private pensions, or people who have got the cash and want to make provision for people, will be first in the queue. However, a more accurate picture of stakeholder pensions will grow over a period of time. The Government's objective, as we set out in the Green Paper some three years ago, is to ensure that more people go into funded pensions. The figures that I referred to are encouraging, because more people are taking out funded pension provision. That is wholly desirable.

David Willetts: rose—

Alistair Darling: Before the hon. Gentleman intervenes, I must say that it would be nice if he were to tell us exactly what is his policy on stakeholder pensions. He referred to the Association of British Insurers report as if it somehow supports his argument, but it is in no way critical of stakeholder pensions. Neither is the research that it commissioned, which accompanied the letter circulated to hon. Members. The ABI report refers to the fact that stakeholder pensions are new. It is too early to reach a judgment, which is what he wants to do, but I am not surprised by that in the absence of a Conservative pensions policy. He has two failures under his belt already, so it is not surprising that he has to content himself with criticising our policies.

David Willetts: The Secretary of State and his fellow Ministers have regularly referred to the target group for stakeholder pensions. All we ask is that he tell the House whether he is hitting his target, what his target is, when we will know whether he is hitting it and how we will measure that. For 25 minutes, he has danced around the point. How can he be judged against the objectives he has set himself? That is all that the debate is about and he has failed to answer.

Alistair Darling: If the hon. Gentleman refers to the pensions Green Paper, which we published in December 1998, he will see the targets clearly set out first at paragraph 27 and then at paragraph 10 on page 49. The target group is people on moderate and higher earnings. It has been the target since 1998, it remains the target today and it will be the target tomorrow and in future years.

Jonathan Djanogly: Will the Secretary of State give way?

Alistair Darling: Not at the moment. Before moving on, I want to make a point to the Liberals. The hon. Member for Northavon—the professor—will no doubt speak, but I notice that he refers to what he perceives as the deficiency of the scheme in the press release published on his website, which states:
	"An element of compulsory saving is essential".
	A very Liberal word that—an "element". No one is sure how much or how little. Is the figure 1, 2 or 3 per cent?
	We will be fascinated to hear from the hon. Gentleman on two points. First, I believe that he has a paper from a pensions company. If he quotes from it, he must provide it to all Members of the House if he wants any credibility. Let us have a look at it; let us see what this pension company has to say. Secondly, if indeed we need an element of compulsory saving, as he puts it, perhaps he will tell us what that element will be. If he has time, he should also tell us how he would fund his pension plans, which cost some £3 billion. There must be a limit to how much the Liberals' tax proposals can cover in respect of education, health, transport and pensions.

Gregory Barker: rose—

Jonathan Djanogly: rose—

Alistair Darling: I have given way to the hon. Member for Bexhill and Battle (Mr. Barker), so I give way to the hon. Member for Huntingdon (Mr. Djanogly).

Jonathan Djanogly: The Secretary of State has frequently referred to the fact that stakeholder pensions are for medium and higher earners. If that is the case, why have the Government spent £6 million advertising them to the great mass of the population? Why have the Government put in place a system whereby companies can be prosecuted for not introducing stakeholder pensions? The system that he describes is for mass pensions, not pensions for a small percentage of the population, and it has failed.

Alistair Darling: It is a long time since I have heard such a daft observation. The Government's objective, which I would have thought both sides of the House shared, is to encourage people who can save to do so. The objective of the Government's advertising campaign is to get people to think about their pension provision in retirement. That is not all we are doing. As the hon. Gentleman may be aware, over the next five years, people will receive an annual forecast of what their pension will be on retirement. I would have thought that most hon. Members would have considered that wholly beneficial.

Gregory Barker: rose—

Richard Ottaway: rose—

Alistair Darling: I will not give way at the moment; I have not finished with this intervention. Good heavens, surely Conservative Members want me to deal with one of them at a time.
	The hon. Member for Huntingdon got one thing right. He has at last understood that the target audience is moderate and higher earners. If one mounts a television advertising campaign, it is not possible to blank out the screens of people on low earnings. It is necessary to show the same advertisements on screens up and down the country, so that people who can save have it drawn to their attention that they need to save for their retirement. That brings me to the third element.

Gregory Barker: rose—

Richard Ottaway: rose—

Alistair Darling: I will not give way, because I am conscious of the fact that this is a half-day debate. Other Members on both sides of the House want to speak.
	The third element of our reform, which is crucial, is to deal with a point raised by the hon. Member for Havant—the incentives to save. Under successive Labour and Tory Governments there has always been a tension between their desire to ensure that there is a floor beneath which pensioner incomes should not fall—even the Conservatives paid income support, although it was substantially lower than the minimum income guarantee—and encouraging people to save. That is why we are introducing the pension credit, which is designed to help people who lose out under the current system because they have done what successive Governments told them to do—put a bit of money aside for retirement.

John Butterfill: Will the Secretary of State give way?

Alistair Darling: Not at the moment.
	The pension credit will ensure that someone who has saved money receives a reward for having done so. That is essential if we are to encourage people to save. Interestingly, many big pension providers welcomed the announcement of the pension credit in November last year as vital if we are to encourage people to save. It is necessary to continue to ensure that we have a system that boosts the income of the poorest pensioners while building in an incentive to save so that if people save through a stakeholder pension, an occupational pension or other means, they receive a reward for it.

Richard Ottaway: rose—

Gregory Barker: rose—

Alistair Darling: I will not give way at the moment. I want to finish the point.
	I opened my remarks by drawing attention to the fact that, at one stage in his career, the hon. Member for Havant was in favour of scrapping winter fuel payments. He then discovered that those sitting behind him were rather nervous about knocking on pensioners' doors to say, "Vote Conservative, it will cost you 200 quid." I would be intrigued to hear how he will persuade his party to say at the next election, "If we are returned to power, we will take away the pension credit."
	The pension credit will benefit more than 5 million pensioners on low and modest earnings. If it is Conservative party policy to remove the pension credit and take money from more than 5 million pensioners, I very much look forward to Conservatives arguing the case. They will have some difficulty doing so.

John Butterfill: rose—

Richard Ottaway: rose—

Alistair Darling: I give way, for the last time, to the hon. Member for Bournemouth, West (Mr. Butterfill). I must conclude.

John Butterfill: I hope that the right hon. Gentleman has read the observations on the pension credit submitted by the pensions provision group, which the hon. Member for Birmingham, Selly Oak (Lynne Jones) mentioned. Paragraph 5 of that excellent report says:
	"As ever, attempts to use means-tested benefits to target help on today's pensioners can also discourage today's workers from saving for their retirement. The Pension Credit scheme would be no exception."

Alistair Darling: The hon. Gentleman is being somewhat selective in what he quotes. The pensions provision group supports the introduction of the pension credit. It would like the credit to be more generous and we could argue about that, but it is not against the credit. Indeed, most pension providers—most independent observers—welcome the pension credit. The fundamental wrong in respect of the social security system that has been in place for the best part of 50 years is that it acts as a disincentive to saving. I would have thought the reform long overdue. My recollection is that one of my Conservative predecessors who is no longer a Member of the House welcomed the reform, because it is necessary for us to reward thrift and effort, not penalise them.
	I look forward to hearing what the Conservatives have to say when the Bill comes before the House. I would have thought that any measure that encourages thrift and rewards effort ought to be supported, not criticised.

John Butterfill: indicated assent

Alistair Darling: I am delighted that I seem to have won one convert on the other side of the House, if no other.

Richard Ottaway: Will the Secretary of State give way?

Alistair Darling: No, I want to conclude.
	Over the past four years, we have recovered some of the damage that we inherited. We have tackled pensioner poverty. We have put in place long-term pension reform to ensure two things. The first is that people on low earnings, people with broken work records, the disabled and women who take time off to look after children have access to a good second pension through the state second pension. In some cases, that will double the amount of benefit that they get. Secondly, we have made reforms to long-term pension provision, by introducing stakeholder pensions, in order to provide more options. Stakeholder pensions are complementary to the existing provision of occupational and personal pensions. Finally, we shall shortly bring before Parliament proposals to implement the pension credit, which will ensure that we not only alleviate poverty but reward thrift.
	It is a pity that, on an Opposition day on pensions, which is an important matter, we do not know the Opposition's position. We know that they still have a savings policy in which 85 per cent. of the gain goes to the richest 20 per cent. of pensioners. We know that they do not agree that 2 million pensioners are at least £15 a week better off. We know that they oppose the pension credit, which will benefit more than 5 million pensioners. It is a courageous decision to be against that. We know that they have nothing to say to people on low incomes who want to save.
	We have no idea where the Opposition stand on stakeholder pensions. All that we know is that sitting opposite me is a man who wants to be remembered for giving free television licences to pensioners without televisions. The hon. Member for Havant, who now speaks for the Conservatives on this matter, wrote the last Conservative manifesto. On tonight's performance, I very much hope that he will write the next one as well.

Steve Webb: It has rightly been pointed out that if a Government set themselves a target, it is appropriate to measure their performance against that target. Our difficulty is that when the Government realise that they are not hitting the target, they attempt to move it.
	The Secretary of State read from the 1998 Green Paper, but he seems to forget that, subsequent to that Green Paper, his pensions Minister, now Lord Rooker, told this House in July 2000 that the target group was not the same as the market for stakeholder pensions; they were separate entities. He said:
	"The target group is those on moderate earnings"—
	not moderate or high earnings, which is what the Department has said in all its written answers since the election—[Interruption.] Is the Secretary of State saying that his pensions Minister was wrong to say that? He went on to say that the White Paper defined that as between £10,000 and £20,000 a year. He could not have been more explicit.
	Either the Secretary of State is saying that the pensions Minister did not know what the target group was or, more likely, written answers now talk about moderate and higher earners because the Government know that they are missing the target of only moderate earners.

Alistair Darling: The hon. Gentleman is a professor, and I thought that professors looked at all the evidence. Should not he look at the Green Paper that set out our policy, rather than take isolated quotes from Ministers? If he looks at the Green Paper, he will see what the target is.

Steve Webb: The status of Ministers' statements is somewhat doubtful.

Tim Boswell: If the target were £10,000, which is a reasonable working assumption in view of what the hon. Gentleman has told us, it would be about half average earnings, so it would be a relatively low income by any standards.

Steve Webb: Yes; there is no sense in which the £10,000 to £20,000 range, which was explicitly mentioned by the then pensions Minister, is anything other than a moderate income, or perhaps even low to moderate. It is certainly not a high income.
	The Secretary of State seems to imply that his policy is frozen in aspic from the time of the Green Paper in 1998. In February 2000, the same pensions Minister told the House that the Government would measure the success of the stakeholder pension scheme by the number of people on moderate earnings without a second pension—those in the target group who take up a second pension. He could not have been more explicit. However, the Government know that they are not hitting the target, so they try to move it.
	Surely, if a Government set themselves a target, they should make inquiries as to whether they are hitting it. I presume that the Secretary of State, being a responsible Minister, will have talked to those who know who buys stakeholder pensions. Who has that information? Those who sell them. I therefore presume that the Secretary of State has been in touch with the sellers and has asked them—[Interruption.] The hon. Member for Stockport (Ms Coffey) prompts the Secretary of State to ignore my question. [Interruption.]

Madam Deputy Speaker: Order.

Steve Webb: Thank you, Madam Deputy Speaker.
	Either the Secretary of State has asked the industry, knows the answer and is covering up or, worse still, has not asked the industry. We have asked the industry and I shall tell the House what a major provider—

Ann Coffey: Name it.

Steve Webb: I shall deal with that in a moment. A major provider has given us commercially sensitive information and has asked not to be named. I am happy to respect that confidence.
	Let me give the Secretary of State some information that he apparently does not have. The major provider said:
	"We analysed the stakeholder business in the first few months . . . and used standard classifications to look at who was buying."
	Four groups of people were buying stakeholder pensions: 11 per cent. are children. I do not have a problem with grandchildren being bought pensions by their grandparents. We need to crack pensioner poverty in 2060, so I am pleased that the Government are making headway on that—never let it be said that they are short-termist.
	Some 58 per cent. of policyholders fall into what is described as four of the wealthiest classes. I wonder whether Conservative Members recognise any of the categories. They are: wealthy equity holders; affluent mortgage holders; comfortable investors; and prosperous savers.

Gregory Barker: And professors.

Steve Webb: Indeed. None of those categories is the target market. As ever, I shall be more generous than Conservative Members and name those who fall into the categories who might be regarded as the Government's target market. This information comes from a provider that sells the product, so it should know. It says that 26 per cent., or one in four, of the products goes to the five categories that form the target market: better-off borrowers; younger spenders; working families; thrifty singles; and middle-aged assured. Thus roughly a quarter of the product goes to the target market.
	The final category, 13 per cent., is the older classes: settled pensioners—Lord Rooker—and older cash users. That 13 per cent. is important and I hope that the Minister will address this matter when he responds. There seems to be a good reason for thinking that some of the 13 per cent. are using the stakeholder pension as a tax dodge. Those people have some capital, they put it into a stakeholder pension one day and then, extremely quickly, they retire and take the money out of the stakeholder pension. They have benefited from tax relief when taking out the pension; they take a quarter of the pot as a lump sum and buy an investment product with the balance, and they have a fantastic return on a very short-term investment.
	I hope that the Secretary of State will not tell us that that is what stakeholder pensions were for. Those people form a whole category. The final 3 per cent. form a category called "other", but I could not quite work out who those were.

Andrew Dismore: The hon. Gentleman has given all sorts of percentages. What was the size of the sample from which the mysterious pension provider was working? How many pensions has it sold, so that we can gauge what the percentages mean in terms of numbers?

Steve Webb: The hon. Gentleman will be aware that if I tell him how many products were sold, he will be able to work out which company sold them. As I have promised to respect that confidence, he must realise that I cannot give that information. If he doubts the percentages, why does not the Secretary of State ring the various companies tomorrow and see whether he gets a different answer? The BBC expressed an interest in the figures and it rang round the other providers, apart from the one that I have mentioned, and they all told the same story. If that survey is not accurate, let the Secretary of State tell us what is, which he has signally failed to do.

Ian McCartney: Can the hon. Gentleman answer a question, just in case I have to deal with the matter later? If the BBC rang every other one, he must have told the BBC who that pension provider was.

Steve Webb: The BBC—

Ian McCartney: rose—

Steve Webb: Let me respond to the intervention.

Ian McCartney: rose—

Madam Deputy Speaker: Order. The hon. Member for Northavon (Mr. Webb) must respond to the intervention.

Steve Webb: Indeed. The BBC rang a sample of providers. Obviously, it did not ring all of them. I made a slip of the tongue. I accept that. I do not know whether the BBC rang that provider or not, because I of course did not tell the BBC.

John Butterfill: I am a little puzzled by the hon. Gentleman's example of a tax fiddle. He said that someone took out a stakeholder pension, promptly retired, took his 25 per cent. and put the money into some other investment. There is only one other investment into which that could be put at the moment: an annuity, which is a singularly bad investment. Does he really think that that is likely?

Steve Webb: If the hon. Gentleman reads the personal finance columns of a weekend as assiduously as I do, he will find that people are being recommended to take capital, put it into a stakeholder pension, on which they can get tax relief at the higher rate immediately, which is a fantastic rate of return, and take a quarter of that out tax free, which is another fantastic rate of return. The combined effect of the tax relief on the way in and the tax-free lump sum more than compensates for the relatively modest return on annuities, even if they buy the best annuity that is going.

Ian McCartney: The hon. Gentleman made a statement to the House that he was maintaining a confidence and had not informed anyone else of the information. He went on boldly and clearly to tell the House that the BBC had phoned everyone else. He must answer the point clearly. If that is the case, he must have informed the BBC. If he has informed the BBC, he should inform the House.

Steve Webb: The complete absence of a response on the substance of the issue is demonstrated by that line of questioning. I said, as the record will show, that it was a slip of the tongue to refer to the other providers. Let me make the position clear. The BBC knows the figures that I just gave. It does not know the name of the company. It rang pension providers and all of them said the same thing. The substantial question is: are they right or are they wrong? Do the Government know? If they do know, the Minister should have brought that information to the House this evening. If they do not know, they have been negligent. That is the situation.
	I look at the hon. Member for Havant (Mr. Willetts) with some respect because it is rather difficult to draw up a motion in the absence of any policy whatever on pensions, with the exception of the annuity policy. The motion says:
	"this House regrets the Government's failure to deliver stakeholder pensions to its target group".
	We have provided evidence of that; the Government have provided no counter-evidence. The motion
	"condemns the failure to reform the obligation to purchase an annuity at age 75".
	The hon. Member for Arundel and South Downs (Mr. Flight) pursued that matter in the previous Parliament. It has been taken up by the right hon. Member for Skipton and Ripon (Mr. Curry) in a private Member's Bill, which I will support. The House will find that there is a Liberal Democrat manifesto commitment to relax the annuity rule, so we support that element of the proposal.
	The motion then
	"regrets the spread of means-testing".
	There are two reasons why means-testing has spread. One is because the money has gone into the minimum income guarantee. The other is because the pension rise has been so small.
	While the Secretary of State was speaking, he was heckled by Conservative Members with that memorable phrase, "75p." When the House was invited to divide on the issue of whether 75p was inadequate, only one party said that it was: the Liberal Democrats. [Interruption.] When the Conservatives had the chance to put their money where their mouth was—[Interruption.]

Madam Deputy Speaker: Order. Please allow the hon. Member to continue.

Steve Webb: Thank you, Madam Deputy Speaker.

David Willetts: Will the hon. Gentleman give way?

Steve Webb: I will.

David Willetts: I remind the hon. Gentleman that that was perhaps not his finest parliamentary moment because his voting would have stopped any increase whatever in the basic state pension. Voting for no uprating was less than smart.

Steve Webb: The hon. Gentleman chooses to forget the two occasions on which the House voted on 75p. He may remember the Liberal Democrat early-day motion that said succinctly, as ever, that 75p on the basic state pension would be inadequate. During a Liberal Democrat Opposition day, we put that to a vote, and the Conservative party abstained. Voting for that motion would have had no effect on upratings, but it would have indicated Conservative opposition. Indeed, I recall intervening on the hon. Gentleman to ask whether he would have put it up by 75p. In his characteristically honest manner, because he is nothing if not honest, he said, "I probably would have done the same myself." So while it is true that the growth in means-testing is regrettable, it is clearly not true that Conservative Members would have done anything about the basic state pension other than to make matters worse.
	The Opposition motion also mentions
	"the burdens on company pension schemes . . . causing employers to close them to new members".
	I suspect that all hon. Members should exercise some caution on that issue. Although it is true that the Government took £5 billion out of occupational pensions, no party—not one—promised in its general election manifesto to replace that money. Therefore, although it is fair enough for Conservative Members to say that they, like Liberal Democrat Members, voted against the proposal at the time, that money is gone and we have to look forward to what will replace it.
	The pièce de résistance of the Conservative motion is in the final line, where the once great Conservative party—which I am told is Britain's lead Opposition party—issues a radical call to arms to Britain's pensioners. Conservative Members call
	"on the Government to review its pension policies".
	They do not demand that the Government do anything in particular, they simply call on Ministers to have a review.
	I recall when, in 1997, we were newly elected, the Government hit the ground reviewing and it was one review after another. The number of reviews was mocked widely by the Opposition. Five years later, however, Conservative Members have reached the pinnacle of demanding just a review. I hope that we get far more than a review. I hope that we get a decent pensions policy.
	In his speech, the Secretary of State pre-empted some of my comments and asked me questions on the Liberal Democrats' approach to pensions policy. I think that it would be in order if I were very briefly to reply to those questions and distinguish our policy from that of Conservative Members.
	We believe that means-testing, which was mentioned in the official Opposition motion, will be diminished only when there is a decent basic state pension. That is the heart of our approach. Although the Government amendment to the motion describes the basic state pension as a "foundation", it is a sinking foundation. When the pension credit is introduced, half of all pensioners will receive it and the pension level will not affect their standard of living at all. The pension level will affect only their credit. Moreover, the other half of pensioners will be the richest half, to whom pension levels will increasingly not matter. Therefore, the Government's policy is effectively to phase out the pension entirely. That is the direction of their policy.
	We believe that the pension needs to be rescued and that the priority group are those—the old elderly—who have seen the real value of their pension decline for the past 20 years. At the previous general election, the Liberal Democrats pledged a 50 per cent. income tax rate on those earning more than £100,000 annually. In written answers, the Chancellor told us how much money that rate would raise. It would be more than enough to pay £15 weekly in the pensions of the over-80s, who are the poorest pensioners in the land.
	The Secretary of State said that pension increases must be either means-tested or paid across the board, but it is possible to have intelligent targeting. We can target increases on the old elderly, who are the poor elderly. They are the priority group.

Andrew Dismore: Will the hon. Gentleman give way?

Steve Webb: In a moment.
	We have to put the pension beyond the realm of means testing. The critical point is that no one will save if means testing is the reward for saving. If we can increase the pension particularly for older pensioners to the level of the means test, every pound that they save thereafter will be pure gain—not 40 per cent. or 60 per cent. gain, but 100 per cent. gain. When we reach that point, we shall have decent levels of funded pensions. Until we have a decent basic state pension, neither the Government's nor the official Opposition's proposals will succeed.

Frank Field: I should like first to emphasise the aspects of the Government's policy that I welcome, and then to draw some different conclusions from the figures that were presented by the hon. Member for Havant (Mr. Willetts). Although I am relieved that so few of the target group have bought a stakeholder pension, the already significant number of those who have bought one should give the Government a very important lesson—that the stakeholder is a real success if one has an adequate first-tier pension. Although one would not expect the Government to be thinking on the Floor of the House about how their pensions policy will develop, I hope that, before the end of this Parliament, Ministers will introduce serious proposals on how to implement an adequate first-tier pension for everyone in the United Kingdom. In addressing that issue, I should also like to touch on the reform proposals that were recently made by the pensions reform group, of which I am a member.
	I welcome two huge successes in the Government's pension policy. The first is that the stakeholder has reduced significantly, and will continue to reduce significantly, the charges faced by pension savers. We need only consult Pensions Weekly to see how much further there is to go. This week's issue gives the example of someone beginning late in the day to save substantial sums towards retirement, and ending up paying contributions of nearly a quarter of a million pounds to the provider, although the pension is marketed as a stakeholder pension. Real progress has been made in reducing charges, and the Government should be congratulated on that. They also deserve our thanks for the efforts significantly to increase workers' access to low-cost pensions. That, too, was part of the stakeholder pension reform. I doubt that any Member will deny that we should applaud the Government's moves on both fronts.
	The difficulty arises when we look at the target group, and at the figures presented by both the hon. Member for Havant and the hon. Member for Northavon (Mr. Webb). If we think about stakeholder pensions in terms of the target group, some disappointment must be expressed in the target group's take-up—although I would say that its refusal to touch the product shows a lot of common sense. Let me explain why many in the target group should not touch the product, and why I am pleased that there are so few take-ups. If we continue our efforts to achieve a high take-up among the lower half of the target group, we—as a Government—may open ourselves to the mis-selling of pensions. That would be more serious than our having to say that our reforms had helped groups other than the one that we had targeted, that we were pleased about that, and that we would proceed to further pensions reform to help the original target group.
	The problem arises from the fact that, in their entirely proper desire to help poorer pensioners now, the Government have holed below the water line their long-term reform of stakeholder pensions if they are targeting those with between £10,000 and £20,000 a year. We know already that about half of them cannot save to make themselves better off than they would be if they spent all their money and took advantage of the minimum income guarantee. Some of our constituents complain that, having saved, they are not as well off as they thought they would be, given what people are picking up on the MIG. The error may be compounded when the pension credit is introduced.
	My worry is that one or two of the big companies that are making a big song and dance about stakeholder pensions are selling them on the basis that the two reforms will be with us for the long term. I wonder whether that is true. Let us consider the cost of linking the MIG to earnings and continuing to link the state pension to prices. Not only do more and more pensioners become eligible for the MIG over the years; because they do, and because one benefit increases so much more quickly than the other, the cost will escalate. Indeed, it is already escalating.
	In fact, I wonder whether the two reforms will be in place at the end of the day. I congratulate my constituents who have not bought stakeholder pensions on the basis that they will be in place; the chances are that they will not. As if that were not difficult enough for the Government, the Chancellor has introduced two other savings products making it even more difficult for anyone who might want to take up a stakeholder pension to decide to do so. Would someone with modest to low earnings, seeing what the Chancellor is offering on individual savings accounts, lock up his or her savings in a long-term pensions product, or go for an ISA? Clearly, most people would go for the ISA.
	We are now told that there will be a savings gateway. All who go through the gateway will have a pound added to every pound that they save. Which of our constituents in the target group will sign up to a stakeholder pension when, by going through the savings gateway, they can double their savings immediately for three years? Moreover, as with all schemes that encourage saving—good to start, more difficult to stop—there will presumably be an extension of the scheme.
	Given that we do not yet know the details of the pension credit, and that half of the target group can make themselves better off by not saving and relying on the minimum income guarantee than they can by saving, should we be surprised at the figures produced by the hon. Members for Havant and for Northavon? I am not surprised at them—in fact, I am relieved, and I hope that this debate helps to spread the message about the stakeholder pension.
	The stakeholder pension is a useful new product. The lesson for politicians is that all those who receive or will receive an adequate first-tier pension are plumping for the stakeholder pension. They are pleased with what the Government have done, and about the significant reduction in costs. They can see those costs falling still further, and they are putting their money where the Government's mouth has been. They are wise to do so.
	Although we should naturally celebrate the successes achieved by the Government's pensions reform programme, my third theme is that at some stage we will have to examine how we propose to ensure that everyone—rather than merely some people—in the country has an adequate first-tier pension. If that pension were to be aimed above means-tested levels, many of the problems identified in the debate would fall by the wayside. There would not be a problem with the mis-selling of stakeholder pensions, as everyone would know that they would keep every penny that they saved if they had an adequate first-tier pension.
	Moreover, an adequate first-tier pension would mean that there would be no problem with annuities. Annuities exist only because we taxpayers pay substantial sums to encourage people to save towards their retirement. It is reasonable, therefore, to expect that people do not spend those savings foolishly, as that would allow them to draw on taxpayer's money for a second time by claiming means-tested assistance. However, people with adequate first-tier pensions will be free, if they wish, to buy annuities with their other pension products. Some will do so, and others—especially in the current climate—might consider that rather a poor deal.
	Finally, I commend for discussion a proposal from the all-party pensions reform group. It has proposed that an adequate first-tier pension could be ensured by combining the existing national insurance pension with funded provision. That combination would be compulsory, but the guarantee would be given—as far as any such guarantee is possible—that people who pay their way and pay their whack will end up with a pension above means-tested assistance levels.
	Hardly any of us can buy such a guarantee in the private market. People as rich as Mr. Branson might be able to, but they do not need to. For almost all of us, therefore, such a guarantee would be very valuable.
	The proposed scheme is quite open about the element of redistribution that it contains, which would ensure that people who cannot pay but who are decent citizens would have their contributions paid up front. In that respect, I disagree with my right hon. Friend the Secretary of State. I consider that, in schemes that contain an element of redistribution, it is better for people on lower pay to be funded than it is for them to rely on credits and promises that future taxpayers may not meet.
	The pensions reform group does not try to duck the fact that such a scheme would come at a price. It accepts that we will have to pay more if we want adequate pensions. Clearly, the way in which those new contributions are introduced is a matter of importance.
	A number of hon. Members have expressed interest in the idea. The pensions reform group is an all-party group, and its members include the hon. Members for Northavon and for Arundel and South Downs (Mr. Flight). Many financial institutions outside the House have played their part in working up the proposals. We have six months in which to examine the aspects that need further work, to ascertain whether the scheme is a starter.
	I hope that at the end of our debate we shall record in the Lobby our pleasure at the real movement that the Government have made in beginning to change how pensions are sold and in ensuring that those pensions offer a good deal for people who save. However, I stress that the Government's keenness to help the poorest pensioners through means testing stores up real problems for modest income groups. Such people feel that the system has now turned against them and that what they thought of doing as decent citizens is not rewarded but penalised.
	We shall always have the dilemma of how to help the poorest, unless we get down to debating, at some stage during this Parliament, how we ensure an adequate first provision for everybody in the country. The hon. Member for Havant helped that debate along this evening by giving us figures showing that all those who currently have basic pension cover have been the biggest takers of stakeholder pensions. They have sent a clear message to Members on the Treasury Bench.

Peter Lilley: I certainly approach stakeholder pensions not as their enemy but as someone who, as the Secretary of State for Work and Pensions pointed out, wishes them to succeed. I have always supported measures to improve the amount and extent of privately funded pension provision. I supported the concept of stakeholder pensions and I am extremely disappointed that they have been such a failure.
	I am disappointed but not surprised. It was mistaken of the Secretary of State to try to suggest that I had ever given a blank cheque to the concept of stakeholder pensions. When they were introduced, I pointed out that they were at best likely to make only a modest contribution to increasing funded provision, and that they were rather more likely to undermine the existing provision.
	The Government set themselves four objectives for stakeholder pensions. The first was to reduce the costs that absorbed the amount of money people put in, so that more would go into investments for their retirement. The second was to require employers to offer access to stakeholder pensions and to encourage them to make contributions to those funds for their employees. The third was to encourage those people in the target group—earning between £10,000 and £20,000 a year—to opt out of the state unfunded, pay-as-you-go scheme and into funded private provision, and to save more in those schemes than they do at present. Finally, the overall intention was to shift the balance of provision for pensions from 40 per cent. privately funded and 60 per cent. pay-as-you-go to the reverse: 60 per cent. funded and 40 per cent. pay-as-you-go by 2050.
	There is half a century to go. All we asked of the Secretary of State was that he give some indication of how each of those four objectives was being achieved. What indication was there from the early results—the first six months—of how they were being achieved? It was sad and significant that the right hon. Gentleman did not try to address his objectives or to assess the results of the early months.
	On the low-cost target, the decision to require providers of stakeholders to charge within a structure that set a maximum percentage cost related to the funds invested certainly means that, compared with the previous systems—which often included a high up-front premium absorbed in commission, and a commission charge that was not reduced relative to the amount put in—those who save limited amounts and who save only intermittently will gain. At first sight, that is an improvement. The 1 per cent. level of charge at first seems quite tight. Actually, over a lifetime's savings, that represents a large gain to the providers. The Australian system starts off with a slightly higher proportion of premiums absorbed in costs—1.29 per cent at present. However, that is set to fall as the system matures. It is calculated that by the time the average amount of savings for each individual in the Australian system has reached just US$30,000, the costs absorbed by the system will be just 0.5 per cent. That might not seem much of a difference, but because of the effect of compound interest, the result over a lifetime of saving can be a net pension that is up to 15 per cent. higher than if the high level of costs had been absorbed. I hope that the Secretary of State will look at that.
	Another target was to require employers to give access. We have not had much mention of that today, but we know from the Association of British Insurers that, at the end of September—just a few days before the scheme became compulsory—about one third of employers were not actually meeting that requirement. A very high proportion were not giving access to their employees by the target date. It was extraordinary that the Secretary of State chose to say nothing about that. He gave no warning, or encouragement, to those who have not met their legal obligations, nor did he warn them of the hefty fines that they could face under the present rules.

John Butterfill: Does my right hon. Friend agree that the situation is even more worrying, because a significant minority of employers are not even aware of their obligations?

Peter Lilley: Indeed. A study by Axa Sun Life has shown that of those who had not put such schemes in place—we are talking here of employers with turnover of £1 million or more—about 90 per cent. did not realise that they had to do so. That is worrying. It is sad that the Secretary of State did not use this opportunity to publicise the scheme. In due course, the law will have its way and employers will do so.
	The more interesting question is how many employers will voluntarily make contributions to their employees through those funds. One hopes that some will, but studies suggest that only about 10 per cent. of employers who do not do so at present are planning to do so. That may be offset by the effect on pensions provision of the availability of stakeholder pensions, encouraging employers to wind up existing schemes and move to a less generous scheme than they had previously. Again, we heard nothing about that from the Secretary of State.
	The key aim of the Secretary of State has been to encourage the target group, about which there is no doubt. The Library brief makes it clear that the target group comprises those earning between about £10,000 and £20,000 a year. It is hoped that they will opt out of the state scheme and save their rebates from that and, if possible, more than that. We know that, in its first six months, the scheme is sadly failing with that target group. The vast majority of the rather small number of policies sold simply represent transfers from approved personal pensions and additional voluntary contributions into stakeholders on stakeholder terms. There is no net increase in the number of people saving or of the amount of saving as a result.
	We know also that the pensions providers have been focusing on people outside the target group—essentially the tax-advantaged saving of high-income earners via their wives and children, or those exploiting the concurrency rules who already have occupational pensions themselves. If their income in any one year falls below £30,000, they can, for the next five years, put up to £3,600 in a tax-advantaged stakeholder in addition to their occupational pension. HSBC, Norwich Union, Halifax, Legal and General, Scottish Widows and the Virgin group have all sold more pensions to those tax-advantaged groups than to the target group. The Secretary of State has not acknowledged that. If he refutes it, and if he has evidence to rebut it, let him tell us. Or is he going to try to convince his supporters on the Back Benches that the whole purpose of the operation was to provide a new tax-advantageous savings scheme for higher income groups?
	The Secretary of State claimed that there was some counter-evidence that there was a boost in personal pension provision, if not strictly in stakeholder provision, over the past few months and that the figures showed that. Actually, that boost is very largely the result of people moving out of Equitable Life and similar with-profits schemes into personal pensions and similar schemes. It is misleading to suggest to the House that it is the result of the success of his scheme; it is the result of the failure of his regulation.

Tim Boswell: Does my right hon. Friend agree that if there was to have been such an improvement, and very plausibly for the reason that he has just given us, it would be in complete distinction to the inexorable decline in the number of participants in occupational pension schemes in the past three years?

Peter Lilley: That is absolutely correct. I have read that there are about 800,000 fewer people in occupational schemes than there were when the Conservatives left office.
	The fourth objective—the overall objective of increasing the proportion of pensions provision in this country that is privately funded—is extremely desirable. This country, unlike the bulk of continental countries, has encouraged people to build up funded private provision, so we do not have to rely on a rising burden falling on the taxpayer as the population ages, in the way that most continental countries do.
	We have more funded private provision for pension liabilities in this country not just than any other country in Europe, but than all the other countries in the European Community put together, because people have bothered to save and invest for the future. As the right hon. Member for Birkenhead (Mr. Field) pointed out when he was Chairman of the Select Committee on Social Security, that is a reason why we should be very cautious about merging our financial future with that of those who have not made such provision for the future.
	We want to make further progress towards that objective and I am glad that the Labour party has reversed its position and now wants to build on our success, but to encourage more people to opt out of the state scheme or to save more requires either persuasion or compulsion.
	Persuasion is costly. It is simply not possible, under the 1 per cent. cap, for people to devote the time and effort needed to persuade people on modest incomes to opt out of the state scheme, and still less to save more than their rebates if they do opt out. The former will therefore devote their attention only to those on high earnings, who make it profitable for them. So either the Secretary of State will have to amend that 1 per cent. cap, and perhaps allow some extra amount to be spent for advice or persuasion if people save more than the rebate when they opt out of the state scheme, or he will have to consider compulsion. There simply are no other options available to him to meet his objective.
	However, it is important that we be clear in our mind as to what compulsion means with second pensions. There is already a compulsory state second pension. Everyone in the country who is in employment must put money into the state earnings-related pension scheme, soon to be the state second pension, or, if they opt out of that, put the equivalent amount of money, via a rebate, into an approved private scheme or stakeholder scheme, or company pension.
	Additional compulsion, therefore, must take the form either of extending that obligation to the self-employed, which is desirable in principle but impractical in practice—even the Australians have not extended their scheme to the self-employed—or of compelling people to opt out of the state second pension and into private schemes. That was obviously the Government's intention when they were preparing their Green Paper. Famously—on page 123, I believe—it contains a reference to when it is compulsory to opt out of the state second pension, which they had failed to proof-read.
	As I understand it, it is in due course the intention to make the state second pension a flat-rate pension, while keeping graduated rebates for those who opt out. I would be grateful if the Minister confirmed that that remains the Government's intention. I hope that he will explain how it can be other than mis-selling to provide people with a state second pension when they could get larger than the equivalent sum if they opted out and bought a better than equivalent pension by so doing. In such circumstances, it is both sensible and in line with the Government's original intentions that they compel people to opt out of the state second pension and into private funded pensions; if they do not do so, they will be guilty of mis-selling. Will the Minister tell us whether that is the Government's long-term intention?
	The third way of introducing additional compulsion into the system would be to require employers to make a contribution—say, the 3 per cent. of income that is required to make personal pensions equivalent to stakeholder pensions in the eyes of the regulator—and to make it compulsory for all employers to pay such moneys into their employees' scheme. Is the Minister considering doing that? If he is, how will he differentiate such a requirement from a simple increase in tax in the eyes of employers or employees?
	I make no bones about the fact that I would like there to be some way in which to require the self-employed to save more, but I cannot see how that could be practicable. It is not right at this stage to require employers to make additional contributions over and above those necessary to fund the state second pension. However, it is reasonable to consider the possibility of requiring people to opt out in due course from the state second pension and into funded pension provision—as we already allow them to do from SERPS—and thereby over time improving their position, enhancing their exposure to this country's growth and prosperity, and generating an increased flow of funds into industry, which will strengthen the economy and benefit us all when we retire.
	It is sad that the Secretary of State has not risen to the occasion today and that he has not talked about his targets and the evidence so far. It is sad, too, that he is manifestly failing to achieve the aims and targets of which we all approve. I hope that in winding up the Minister for Pensions will do better than his colleague did in his opening speech.

Geoffrey Clifton-Brown: I am grateful to my right hon. Friend for giving way just before the end of his speech. Does he agree that the people who will benefit most from opting out of the state system and perhaps from being compelled to opt out of the state second pension are the youngest members of our work force? If in getting people to opt out of the state second pension we started with the youngest people—who by a compounding effect have the most to gain from having a private pension—it would be the beginnings of establishing the second, private pension as a norm.

Peter Lilley: My hon. Friend is correct. His suggestion bears a startling similarity to the proposal I made before the 1997 general election—the basic pension plus—which I acknowledge bore a similarity to proposals in a paper that was published by my hon. Friend, which I subsequently saw. I hope that Ministers will learn as much from him and me as we have learned from each other.

Several hon. Members: rose—

Madam Deputy Speaker: Order. The debate is a short one and little time remains. If hon. Members keep their remarks brief, all may be able to catch my eye.

David Kidney: I shall be brief, Madam Deputy Speaker.
	Stakeholder pensions began in April. On 8 October, about a third of a million employers were required to designate a stakeholder scheme. Some more relevant changes, such as the new pensions service and SERPS becoming the state second pension, are due to be introduced in April 2002. It strikes me as unreasonable of people to leap to judgment as they have tonight, and to use words like "flop" and "failure" so soon. However great the desire to carry out assessment and evaluation, it is reasonable to allow more than six months and to complete the development of the policy first. That is my answer to the criticisms that have been made so far.
	On a more constructive note, my message is that, other than the defence of the nation, it is difficult to think of a public policy area where long-term consensus among political parties would be more useful than pensions provision. I think of the young workers of today, considering whether to make an investment in a pension for their retirement decades hence. They will be thinking of the number of general elections between now and when they retire and the changes in the law on pensions that could take place within that time. They will be thinking of historical events that might put people off having a pension.
	Being as neutral as I can and not seeking to attribute blame to any political party, I could list many events such as pensions mis-selling, the attack on SERPS and more recently the problems of Equitable Life, not to mention the changes in our economy, with times of high interest rates and inflation and today's low interest rate environment and the effect that that has had on rates for annuities. People will bear all those things in mind when they decide whether to make that investment in a pension.
	To put the stakeholder pension in its place in present public policy, the Government want the basic state pension as the foundation—with all the criticisms that the Liberal Democrats would heap on the sturdiness of that foundation—and they want to build on that with the second tier of pensions and provide sufficient diversity of choice for people to have no excuse that they cannot find a pension that suits them. As many hon. Members have said, the stakeholder pension is one choice that might suit some people. That is a sensible policy.
	Stakeholder pensions are designed in particular for people on modest incomes, although no one is excluded from the entitlement to take out such a pension. Many hon. Members have commented on the desirability of the standard features of stakeholder pensions and the limits on management charges. Those pensions make an important contribution to the second tier.
	Surely it is in the interests of all hon. Members and of the entire population that people be encouraged to save for their retirement and that they save enough to build up sufficient funds and receive an adequate income in retirement. Surely those are the goals that we all want to achieve. The best way to achieve those goals is through stability—stability of public policy, which is where the requirement for consensus among politicians comes in. I also believe that it means the stability of public-private partnership. Labour has accepted, although it has been painful, that there is a role for private provision. I appeal to Conservative Members to accept the painful truth that there is also a role for public provision and that the two must go together to make a successful whole pension policy.
	Stability of regulation is also required. The critics of regulation should bear in mind the fact that the Financial Services Authority will not have all its statutory powers until the end of this month. We also need stability in the economy. Most rational politicians think that an independent Bank of England and inflation target are useful contributors to a stable economy.
	We need stability of pension rules. It is vital when we try to persuade people to take out pensions that they are confident that as much as possible of their investment will accrue to their pension fund throughout their working life, and that they will not be robbed of great chunks of their investment every time they change from one scheme or one job to another.
	The public policy tools that politicians have are the basic state pension, the pension credit, regulation and partnership with the private sector. Importantly, the new second state pension allows credits for carers. That is a vital feature that must be retained whatever changes are made. A strong and diverse second pension provision market is also a tool.
	There ought to be a concordat between political parties individually—never mind just the one party in government—and the providers; there is also an important role for employers. Research by the Association of British Insurers shows that the proportion of the target work force for stakeholder pensions who would be willing to take out a pension would rise from one third to one half if employers contributed. We need willing employers to be partners in that enterprise.
	There must be a willingness to confront the obstacles to public policy that will crop up from time to time. The present problem with annuities is one such obstacle and we should all find a solution to it. We need less of the party political bickering and more of a unified message from politicians and providers, so that from now on we put the welfare of pensioners at the centre of pensions policy.

John Butterfill: I shall be as brief as possible in dealing with this important subject. I am afraid that the Government missed a tremendous opportunity when they first reviewed pensions by not building on the work of the pensions reform group, the all-party group that I chair and the retirement income working party, and completely restructuring pensions in a way suggested by hon. Members on both sides of the House. An element of compulsion is necessary. My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) suggested that there could not be compulsion on employers. Of course there could, just as one could hypothecate part of the employer's national insurance contribution. One could do something similar with the self-employed, who would be compelled via an increased contribution or, to avoid that, by showing that they were making private provision.
	The stakeholder pension has only one merit—to drive down costs—which I accept is vital, as costs were far too high. However, looking at the target group, I believe there is a grave danger of mis-selling. In previous debates in the House, I have said that it is difficult to envisage how any independent financial adviser could recommend a stakeholder pension to someone in the target group without being at risk of mis-selling. The Secretary of State said that that problem would be overcome by the pensions credit. He should read the full response of the pension provision group, which states in a summary:
	"We are concerned at the limited amount of information in the Consultation Document about the intended design of the Pension Credit scheme, how it would be implemented and the implications for other benefits such as Housing and Council Tax Benefits.
	We are surprised that the Government has declined to publish fairly basic information, such as the number of people who stand to gain and the additional amounts they would receive from the Pension Credit scheme and the expected total cost of the proposals.
	We greatly regret the lack of clarity. This seems a serious step backward from the extent of detail and information the Government gave in the 1998 . . . Green Paper.
	We are also concerned about the possible negative impact this uncertainty could have on people's willingness to join the new Stakeholder Pension Schemes which are about to be launched and on the ability of financial advisers to offer informed advice on the decisions people will need to take."
	That problem is compounded by annuities. The fact that annuities are low makes it difficult for people in lower income groups to benefit. If annuities were abolished, as recommended by the retirement income working party, and a limited platform equal to the minimum income guarantee were introduced, people would be free to do what they liked with the rest of their money, subject to certain constraints, and much of the problem would be overcome.
	We are faced, however, with a dichotomy within Government. The Inland Revenue is resisting annuity reform. A press release issued after a meeting with a Treasury only yesterday said that reform could
	"lead to unsustainable tax leakage owing to increases in income tax rebates on contributions once the 'disincentive of buying an annuity' had been removed".
	In other words, part of the Government is saying that a disincentive is needed for people to buy pensions. It believes that the annuity is a disincentive, hence it must be kept so that excessive tax relief does not have to be given. What nonsense; I thought that it was Government policy to increase the incentives for people to buy personal pensions.
	The press release also says that pensions schemes could lead to the very rich having
	"a mechanism to avoid inheritance tax."
	At the moment, if the very rich put everything in a trust, they have to arrange to die before 75. Inconveniently, that does not always happen so, once the 75-year rule is removed, they could use that as an inheritance mechanism. There is a simple way of dealing with that; all the Government have to do is legislate to cap contributions from the rich, and the whole problem disappears. Yet the Government retain that antique device, and one must ask why. Perhaps one of the reasons is that by forcing people to buy annuities, they force them to buy Government bonds at ever reducing rates. The Government are therefore forcing retiring pensioners to fund Government debt.

John Mann: In the interests of brevity, I have cut out a significant proportion of my speech. I keep coming to Opposition day debates, unlike many Opposition Members. At least there are sufficient Conservative Members to oblige them, if they were a small company—unlike the Liberal Democrats—to have a stakeholder pension.
	I have been waiting for the cut and thrust of debate—that explosion of ideas that is supposed to characterise Parliament, with the Government being robustly and precisely examined by a defiant Opposition. Each day in debates I wait with excited anticipation for an onslaught from the official Opposition, but all we get is the occasional Back-Bench cameo.
	I could compare the situation to a game of Bagatelle that I once received. Hon. Members may recall those traditional Bagatelle games. When one fires the spring, the ball bearing spins around with a "ping". The one I got was one of those badly made Bagatelle games; as one drew the spring back, the sound was less of a "ping" and more of a "boing", as the ball bearing trickled slowly up the game and lamentably cascaded downwards. When I listen to those on the Opposition Front Bench, I hear no "ping" today.
	For 18 years, during which I first started paying in, I had to deal with the raiding of pension funds by employers when I advised pension fund trustees. During those 18 years, I had to watch as members of my family without occupational pension funds retired into poverty pensions. With all the brains available to the Government, after 18 years there was still no sustainable, effective pensions policy. Instead, there was the legacy of the pensions time bomb facing us now.
	I want to ask my right hon. Friend the Minister about the role of the trade unions in stakeholder pension funds. The occupational pensions that we have are the legacy of effective collective bargaining by working people through their trade unions—bargaining to get the employer to make a serious contribution to an occupational pension. In persuading employers to take up and develop stakeholder pension funds, and in bargaining beyond stakeholder pensions into occupational pension funds, an opportunity is being missed by the trade unions which should be a rightful part of their historic role and, more importantly, a critical part of their future development as organisations representing working people. They should seize the opportunities provided by the stakeholder pension funds and run with them, both for their members and in terms of their interaction with employers.
	I would liken the stakeholder pension to a game of cricket. The stakeholder pension is, so to speak, the first pair at the wicket still batting, but what is required is a solid team performance to take the team through to a long-term win. It is far too soon to draw conclusions from the early returns that we have, especially as so little information has been provided. A natural caution on the part of the public when faced with the question of where to invest money for their future is understandable, particularly when one considers the target group at which stakeholder pensions are aimed. I would go further and say of my constituents, who are most prudent and financially cautious people, that it is laudable that they have waited to see how the legislation pans out before committing themselves to anything.
	In the stakeholder pension, the Government have succeeded in beginning to create access to a low-charge pension scheme for those who previously had no means of securing their future. In the long term, it is the beginning of the process of providing security for those people's future. I congratulate the Government on the measure. It is a "ping" in the right direction.

Peter Viggers: The Government came to office promising great things of the stakeholder pension: high standards of value for money, flexibility and security. Things started to go wrong when they used the expression "low-cost pension" to describe it. As has rightly been said, the intent is to drive down the cost of a pension, but there is no such thing as a low-cost pension. Pensions are extremely expensive and large amounts have to be found to build up a fund if there are to be good pensions. I see that as a result of my declared interest as a trustee of a pension fund.
	Do stakeholder pensions work and are they worth while? One problem that has not been mentioned is that they were introduced through employers and made compulsory for those with more than five qualifying employees. That was an acrimonious point. It means that about 15 per cent. of the target population who work for smaller employers are excluded to start with.
	A second point is that the scheme is voluntary, not compulsory. I do not believe that it will be possible to have a viable scheme unless it is made compulsory, which will drive down costs. Only 416,000 people have taken out stakeholder pensions.
	I was baffled by the Secretary of State's insistence that stakeholder pensions are for moderate and higher earners. If they are, why did he tell the House on 23 February 1999, at column 229, that the target was "middle and lower ranges" of income? Why did Lord Rooker, the then Minister of State, say that stakeholder pensions were intended for
	"those with moderate incomes of between £10,000 and £20,000"?—[Official Report, 3 April 2000; Vol. 347, c. 719.]
	During the debate, I came to the conclusion that the Secretary of State had missed the goal the first time around and was therefore moving the goalposts nearer to the current situation. Only 36 per cent. of those who have taken out stakeholder pensions are in the main target area of income of £11,500 to £20,000 and a quarter have incomes of more than £20,000. We all know a lot of advertising seeks to attract richer people to take advantage of the stakeholder tax breaks on behalf of other members of their family.
	Could there be a better use of the money by people taking out stakeholder pensions? In many cases there could. The state second pension scheme, which takes over from SERPS in April 2002, may be a better investment for many because of the low level of contracting-out rebates. It has not been noted during the debate that many of those in the stakeholder pension target area have personal debt of some kind on which they are often paying a large amount of interest. The best investment that they could possibly make would be to pay off their private borrowings, on some of which they are paying well over 20 per cent.
	The real reason why I oppose the system put forward by the Government is the level of means-testing, which does not just concern me but makes me angry. The Chancellor of the Exchequer, addressing the Labour party conference in 1993, said that the next Labour Government would
	"achieve what in 50 years of the welfare state has never been achieved—the end of means tests for our elderly people."
	Between 1979 and 1997, the number of pensioners means-tested fell from 57 to 38 per cent., but it is now due to rise to between 56 and 59 per cent. by 2003. The minimum income guarantee linked to wages means that there is a growing gap between the basic state pension and the guaranteed minimum income. The greater that gap becomes, the greater the means-testing, the effort that has to be made to bridge the gap and the extent to which a saver on modest earnings is wasting his or her money by throwing it away and spending it where state benefits are otherwise available.

Tony McWalter: Will the hon. Gentleman give way?

Peter Viggers: I am sorry; I cannot.
	Someone on the minimum income guarantee will have housing benefit and council tax relief. That means that a person who has made prudent, but modest, provision for retirement can be worse off than someone who has never done anything in that regard. This is a widening gap and there is increasing and justified resentment about it.
	When I make that point to the Secretary of State— I have done so several times—he simply asks whether I would not allow some extra relief for those on the lowest incomes. I understand the point, but does he understand that there is a deepening sense of resentment among those who have made prudent provision for their retirement about the fact that some people who have made no provision are better off than them? Of course, the pension credit that is to be introduced would increase the amount of means-testing to about 65 per cent. Does the Minister think it is acceptable for 65 per cent. of pensioners to be on means-tested benefits? I submit that it is not.
	I cannot let this debate go without making two more points. First, I thank the Secretary of State for being present throughout the debate, which is unusual among Cabinet Ministers these days. His presence is a great compliment to the House, for which I thank him.
	On the second point, I shall make my last comments in very rapid succession. This Government have introduced the greatest of all stealth taxes in damaging pensions by abolishing advance corporation tax relief for pension funds. That is a devastating blow of some £5 billion a year that is only now being felt. It is estimated that a 30-year-old will now need to pay an extra £200 a year to maintain his pension at the previous level. Tesco has increased contributions to its pension fund by 15 per cent. to pay for the change. Some 17 per cent. of those on final pension schemes are now in schemes that are being closed to new members. That is a devastating indication of the damage done to the pensions industry by the abolition of the tax relief. The result is that 9,000 new pension schemes were formed in 1997, 5,000 were formed in 1998 and only 3,000 were formed in 1999. What would I do? I would not mislead people by talking about low-cost pensions, but increase the basic retirement pension, introduce compulsory contributions to an adequate scheme and so reduce means-testing and increase self-respect for our pensioners.

Tony McWalter: I am aware, Madam Deputy Speaker, that you want this contribution to be no more than three minutes long, so I shall do my best to confine my remarks to that time.
	With regard to the previous speech, I must say that pensioners in my constituency are glad that there is a large gap between the basic pension and the minimum income guarantee. That £20 gap for single pensioners corresponds to £20 more that they have to spend, or £20 for a better standard of living. If the previous speaker the hon. Member for Gosport (Mr. Viggers) was trying to suggest that that is demeaning because it is based on means-testing, all I can say is that it is real money that has a role to play in improving the quality of those people's lives. I am also glad that we have this Government and that they are pursuing that policy, and that the Conservatives are not in government, as they seem to want to remove it.
	My main point is to emphasise to my right hon. Friend the Minister that it is important to take on board the remarks made today, such as those of the hon. Member for Bournemouth, West (Mr. Butterfill), about the interface between the arrangements for the stakeholder pension and the pension credit. Like my hon. Friend the Member for Bassetlaw (John Mann), I do not feel that I would want a stakeholder pension if I were earning, say, £13,000 a year. That seems a pretty bad deal. Even if one were to build up painfully over many years a fund that was four times one's income, at £50,000 or so, it would provide an income of about £80 a week, on current annuity rates. When that amount is added to the basic pension of £70-odd, one is left with about 150 quid. One would probably then be just at the edge of the taper for the figures that we have seen in respect of the pension credit and would not, perhaps, get many of the benefits that would be available if one was on the minimum income guarantee as well. One would also be taxed, and various other matters could be relevant. If one was eligible for housing benefit, one would be removed from it and so on. One's quality of life might still end up poorer than it would have been under the minimum income guarantee, even with a pension credit, if the credit was not generous. That calculation is based on the indicative figures that we have seen for the pension credit.
	We must think much more carefully about the relationship between the stakeholder pension, the pension credit and the associated systems of benefits, so that in the end there can be a clear incentive for people earning £13,000 a year or thereabouts to make the real sacrifices that they would have to make to build up a fund of quadruple their current income level. I hope that my right hon. Friend the Minister will say that he is going to rethink some of the arrangements relating to the pension credit to ensure that there is a real incentive for people to buy into this scheme.

Tim Boswell: This interesting debate has taken place against a background of two wider economic considerations, both of which are disturbing, and both of which have been created by this Government alone. The first is the alarming overall decline in the savings ratio, which has halved over the almost five years of this Government, from more than 10 per cent. in 1997 to 5 per cent. in the early quarters of this year. It is entirely characteristic of the Labour Government that they concentrate on one vital part of the scene—pensions, which we all accept are vital—while neglecting others.
	The general message that the Government are putting out is one of a disincentive to save. It is hardly surprising that that disincentive generates the conclusion that the annual savings gap caused by these policies is now measured in tens of billions of pounds, and is currently estimated by the Association of British Insurers at £27 billion a year.
	Secondly—this is quintessential new Labour—the Government offer inducements in one direction, for stakeholders, while at the same time damaging the market prospects in others. At an early stage of the last Parliament, I was more directly involved in the many debates about the Government's abolition of advance corporation tax and payable tax credits. Those measures took more than £5 billion from pensions every year and, as my hon. Friend the Member for Gosport (Mr. Viggers) has just said, effectively take £200 a year from the average 30-year-old.
	Those figures should inform our general concerns in this debate. It has been an interesting one, and it belied the bland comment that I have just received in a written answer from the Minister for Pensions who said, heroically, that stakeholder pensions were designed to be simple. They may be simple enough, but the conclusions for policy are far from simple.
	My hon. Friend the Member for Havant (Mr. Willetts) provided a masterly dissection of the subject, emulated, if only in part, by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) and by the right hon. Member for Birkenhead (Mr. Field). My hon. Friend the Member for Havant received admirable assistance and many thoughtful comments from my hon. Friends the Members for Bournemouth, West (Mr. Butterfill) and for Gosport. The hon. Member for Northavon (Mr. Webb) helped to twist the knife in the Secretary of State, and there were further contributions from the hon. Members for Stafford (Mr. Kidney), for Bassetlaw (John Mann) and for Hemel Hempstead (Mr. McWalter).
	Everyone has made a genuine contribution, although perhaps the least convincing or cogent was that of the Secretary of State. He went to great lengths not to answer the questions that were put to him. He said that he did not know the answers, but I am not sure whether ignorance is an excuse. When Ministers of the Crown set up a new policy, they ought to be able to answer our questions. Even if they are not yet able to do so, they ought at least to have established the machinery by which their policies can be tested, and on which they can report. I know that he is uneasy about that, as is every Member who has spoken.
	The argument is not about motives, as we all want to increase the proportion of income being put aside for the retirement years. We have little option on that. We must also offer a fair deal to those making the saving, and we need to see whether the current arrangements, much hyped by the Government, are working.
	The first conclusion that I have to draw is that there is and remains a radical confusion at the heart of the Government as to the target group for stakeholder pensions. One of my hon. Friends referred to the Secretary of State's original statement in February 1999 that people in the middle and lower ranges were the target group.
	The former Minister of State, Lord Rooker, has been mentioned several times and, in particular, he referred to the target group as those on moderate incomes of between £10,000 and £20,000 a year. That is 5 million people. By definition, almost all those persons will be on below average earnings.
	The Government's new definition, set out in their amendment to our motion, defines the target group as "moderate or higher earners". On the formula that they have given, that means anybody earning £10,000 a year or more, and the sky is the limit. In new Labourspeak, lower means higher or, if it means that someone can meet a target, the target changes to meet the concept of the day. I knew someone who consumed an inordinate amount of mothballs. When the shopkeeper asked why he had been back to the shop four times in a week, he said, "You can't hit them every time."
	Secondly, the stakeholder scheme, by any standard, is hardly selling like hot cakes. Let us take first the employer gatekeepers. Remember, they are under a legal obligation to designate schemes for any business with more than five employees, yet on the statutory date of 8 October it was estimated that at least a third fell at the first fence as they had not registered by the deadline.
	The Occupational Pensions Regulatory Authority is responsible for policing those defaulters and Ministers must hope in their hearts that it does not feel too many collars, because it could be overwhelmed. That would send a disturbing signal to those Ministers who want to pose as the friends of business.
	The Minister of State and I have debated employment law, and I am interested in whether an individual employee with a grievance about non-designation could pursue a case through the already overloaded employment tribunal system because he had not received his rights. I am not sure whether that has ever been clarified.
	It is hardly surprising that take-up is relatively disappointing, with only 416,000 stakeholder policies sold to date. Many were no doubt transferred from other schemes. I am interested in a written answer received last week by the hon. Member for Northavon, although he did not refer to it. Despite all the effort and expense involved in advertising in the first place, Ministers now say that they are not specifically advertising stakeholder policies. That is not a ringing endorsement.
	Figures on stakeholder pension charges published last week by the Financial Services Authority show a wide disparity between providers. In many cases, a personal pension still offers better value, although that of course depends on the circumstances. I do not know whether it suits the Government to say that they have targeted the workers by hand and by brain, but they have a achieved a position—I have to say that I have no interest to declare—whereby the rational purchaser of a stakeholder pension is me. I have a brand new granddaughter, and I can make provision for her 60 years down the track. Therefore, Government policies could succeed only if they operate as outdoor tax relief for the financially sophisticated. All that is of a piece with the Government's other failures in pensions policy. Like other private pension holders, stakeholders will have to go through the annuity hoop referred to by my hon. Friend the Member for Bournemouth, West and others. There is a strong Treasury interest in trying to secure public funds at minimal cost.
	Then there is the whole issue of the minimum income guarantee. That has been just as much a flop in practice as the stakeholder pension, with a take-up of only one fifth of the target group to date. Of course, Ministers pray in aid their forthcoming pension credit. They should ask themselves whether they are absolutely sure that those changes can be financed with no losers, and with significant beneficiaries but at no Treasury cost. Even if they can achieve that, are they happy about subjecting more than half of pensioners to the inevitable means-testing?
	Last but not least, the overall number of pensioners in occupational schemes has fallen year on year under this Government. Many also face a retreat from quality, having to move to less generous schemes. It is no accident that the IPPR—not normally a friend of those on the Conservative Benches—concluded in August:
	"The Government's pension policy is basically in a muddle. It is unravelling and something needs to be done about it and needs to be done quickly."
	Age Concern echoes some of those concerns. If Ministers are still not in the mood to listen, hon. Members must make a modest start in the House tonight by voting for our motion.

Ian McCartney: I shall try to deal with hon. Members' questions as I go along but if, by the end of the debate, I have not done so I shall write to them and place my letters in the Library so that those who have taken part in the debate can see the answers.
	I thank my right hon. Friend the Member for Birkenhead (Mr. Field) and my hon. Friends the Members for Stafford (Mr. Kidney), for Bassetlaw (John Mann) and for Hemel Hempstead (Mr. McWalter) for taking part in the debate. It has given us an opportunity to set out the four key stages of the Government's policy: saving the basic state pension from the Conservatives, who would have liked to have privatised it; reforming SERPS by creating a second state pension to help the low paid and the carers of disabled people for the first time ever; the creation of the pension credit so that it pays to save; and giving people a choice through the stakeholder pension, with a second tier for those on moderate and higher earnings.
	When I listened to Conservative Members in this debate I felt astonished, because for 18 years they failed virtually every pensioner organisation in Britain. They left us with a complete mess and were contemptuous of older people. Hon. Members will remember what those in charge of Conservative policy thought about pensioner poverty and treating people with dignity. Edwina Currie, the former Health Minister, told pensioners:
	"Buy long johns, check your hot water bottles, knit gloves and scarves and get your grandchildren to give you a woolly night-cap."
	That was the Tory strategy for pensioners in Britain; and it got worse.

Tim Boswell: Will the Minister give way?

Ian McCartney: Why?

Tim Boswell: I simply want to ask the Minister a question—it does not refer to the former colleague to whom he has just referred. Will he tell the House whether pensioner incomes rose or fell under the Conservative Government?

Ian McCartney: When the Conservatives left office there was the biggest gap in equality of pensioner incomes in the history of this country.

Gregory Barker: Will the Minister give way?

Ian McCartney: No. The hon. Gentleman has been jumping up and down like a jack-in-the-box. He and the hon. Member for Huntingdon (Mr. Djanogly) have been like Pinky and Perky.
	As my right hon. Friend the Secretary of State highlighted, in our first four years we cleared up the sorry trail of misery created by the Tories over 18 years. We simply rolled up our sleeves and put right the injustices of our inheritance. We tackled the legacy of pensioner poverty; dealt with the inherited SERPS debacle; and put right the mis-selling scandal, ensuring that compensation was paid to the thousands of people who were conned by Tory Members into leaving their occupational scheme.
	Put simply, the Tories failed those who needed help most. At least 2 million pensioners were living on or below woefully inadequate levels of income support. Many more were living in fuel poverty. That was the reality of the 18 years of Tory rule. The Tories did nothing for women who stayed at home to look after their children or elderly relatives. Those women could not build up decent pensions and were left to be in poverty when they retired. They deserved better and the Tories did nothing for them.
	The Tories left us with a system where there were huge disincentives to save. Why should people have saved for retirement when all they would have found was that they were no better off, or in some cases worse off? People saved for nothing under the Tories. Nor was a framework in place to offer good-value alternatives if individuals could not access an occupational pension scheme.
	In the teeth of Tory opposition, we were not prepared to ignore those issues and to condemn many pensioners to a life of poverty. That is why during our first term in office we reviewed the pension system to replace it with one that is modern, inclusive and fair to everyone. Our strategy is simple: we want to ensure that all pensioners have a decent income in retirement. Therefore, we have taken action to help all pensioners, while giving priority to the least well-off.
	The basic state pension will remain the foundation of income in retirement. Nothing the Conservatives said today showed that they would commit themselves to that, too. It is an essential building block of pensioner income, but we should not look at it wistfully through rose- coloured glasses. It provides a basic income in retirement—nothing more, nothing less. That has always been the case.
	The system has flaws. That is why we are modernising it. In the process of modernisation, we want to take steps to ensure that we do not penalise married women who paid the reduced stamp, and that low-paid workers who did not earn enough to pay national insurance get access to the second state pension. We want to ensure that we have a system where people retire with dignity and a guarantee of income.
	That is why we introduced above-inflation increases in retirement pension this year and next—£5 a week for single people, £8 a week for a couple—and from April 2002, there will be further increases of £3 a week for single people and £4.80 for couples. We introduced the minimum income guarantee for the poorest pensioners in our society, free television licences for the over-75s worth £104, and winter fuel payments worth £200. All those were opposed by Conservatives.

Peter Lilley: Will the Minister confirm that the value of the extra money paid to pensioners is less than the £5,000 million a year that the Government are extracting from pension funds, so that pensioners overall are net losers from the Government?

Ian McCartney: That is absolute nonsense. Furthermore, the right hon. Gentleman is one of the most culpable because he was the Secretary of State for a long period during the last Conservative Government, who extended means-testing while putting more people below the poverty line. He stood back and watched as community after community faced high unemployment and 50-year-olds were put out of work. As well as losing their job, they lost the opportunity in that part of their earning life to have a decent pension in retirement. He should hang his head in shame for what he did as a Minister.

Paul Goodman: Will the Minister give way?

Ian McCartney: Can the hon. Gentleman sit down for a moment? He phased me—I thought Mr. Bean was standing up in front of me. I apologise. I will get back to him.
	We are spending nearly £3 billion a year more on pensioners than it would have cost to restore the earnings link in April 1998. This year, 2001–02, we are spending around £4.5 billion extra a year in real terms on pensioners as a result of policies since 1997. In 2002–03, that will rise to £5.5 billion extra a year, to answer the right hon. Member for Hitchin and Harpenden (Mr. Lilley).
	I give some examples of how that additional money has been spent. At April, nearly 2 million of the poorest pensioner households will be at least £15 a week, or £800 a year, better off in real terms as a result of the measures that we have taken since 1997. Our policies are helping those who are most in need of that extra spending. A total of £2 billion is going to the poorest third of pensioners, five times more than the earnings link would have given them. That approach is narrowing the gap between rich and poor.
	It was a rough-and-ready solution to a real problem, but it has worked. In the three years since the introduction of the minimum income guarantee, we have paid £12 billion to the poorest pensioners in our society. I refuse to apologise for such a policy.

Paul Goodman: Will the Minister give way?

Ian McCartney: I will give way later. Be quiet. [Interruption.]

Mr. Speaker: Order. The Minister is not giving way.

Ian McCartney: I have never in my life been frightened of a Conservative, however big.
	In this debate, Conservative Members have placed great emphasis on the means test. Either they want to cut the minimum income guarantee and reduce income by £15 per week for the poorest pensioners, or they want to make a huge increase in the basic state pension. However, the latter option is not Tory party policy. What is their policy? Are they going to cut pensions by £15 per week for the poorest pensioners? It is just another example of Tory Members thrashing around on policy.
	We shall soon be publishing our proposals on the pension credit, which will remove stigma and needless complexity, combat poverty and promote security—which is critical. Half of all pensioner households will be entitled to the credit, which will signal the end of the weekly means test. We shall modernise the way in which we deliver help to pensioners, simplify the rules and significantly reduce the information that they have to provide initially. We shall enable pensioners to receive their entitlement with much less intrusion and hassle.
	The pension credit is the next stage of our strategy to deal with disincentives for people to save. Introduction of the credit will reward people for saving for their retirement. The credit will provide a guaranteed income level below which no pensioner should fall. It should be worth, in 2003, about £100 for single pensioners and £154 for couples. This is the first time that people with modest savings will not be penalised for thrift. Those who qualify for the pension credit will receive a cash top-up for the pounds that they save. When they were in government, Conservative Members' priority was to tax moderate and small second pensions at a rate of 100 per cent. and give tax rebates to the most wealthy in society. That is not our priority.
	There was a gap in the market for low-cost, secure, flexible and good quality pensions. Consequently, we introduced the stakeholder pension, which has been widely welcomed, even by the Tory house magazine. The personal finance editor of "The Sunday Torygraph" said:
	"There is absolutely nothing wrong with stakeholders. For those who can afford to put money away to fund their retirement they are a jolly good idea."
	Last year, there was no facility for people in the target group to have such a pension. Two thirds of employers are now on board, and hundreds of thousands of individuals who did not have appropriate pension cover now have it. The policy is a success, and it will continue to be a success.
	We have a continuing monitoring and evaluation plan to assess the impact of stakeholder pensions as well as information from the pensions industry. We shall continue that assessment. Conservative Members have said nothing today to change my mind that stakeholder pensions were the right policy to introduce, or to make me doubt that the policy will ensure that, in the next few years, hundreds of thousands of people who had no access to pensions under the Tories have such access.
	Despite the Opposition's attempt to rubbish our pensions strategy, it is clear that it is their policies, not ours, that are in disarray. Their policies are unworkable, unattainable, unsustainable and very unpopular, even among Conservative Members. Their policies are a continuing catalogue of disaster.
	There is no confusion about where the Government stand on pensions. Pensioner poverty increased under the Tories, but the Government are reducing it. The Tories mis-sold pensions, but we ensured that their victims were compensated. The Tories had the state earnings-related pension scheme, but we are modernising it. The Tories tried to cheat widows by not allowing them to inherit SERPS, but we have put that right. The Tories wanted to abolish winter fuel payments, but we have increased them to £200. The Tories wanted to deny over-75s a free television licence, but we have introduced a scheme to provide them with one. The Tories introduced charges for pensioner eye tests, but we abolished the charges. The Tories increased VAT on fuel, but we reduced it to the lowest possible level. The Tories also opposed the pension credit.
	Worst of all, the Tories coldly condemned millions of older workers to the dole. They abandoned them. They rejected them. They threw them on the scrap heap. The Government are against age discrimination, and we shall legislate against it.

David Maclean: rose—

Ian McCartney: I ask the House to reject the Tory motion.

Mr. Speaker: Order. I take it that the Minister has finished.

Question put, That the original words stand part of the Question:—
	The House divided: Ayes 194, Noes 328.

Question accordingly negatived.
	Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
	The House divided: Ayes 324, Noes 194.

Question accordingly agreed to.
	Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
	Resolved,
	That this House welcomes the Government's reformed framework for pensions, which ensures that today's pensioners share in the country's rising prosperity and that tomorrow's pensioners are encouraged to save for their retirement, building on the foundation of the basic state pension; believes that pensioner poverty must be tackled through the minimum income guarantee; supports the reform of SERPS to create the State Second Pension which will give more help to low paid earners and people with broken work records, such as carers and disabled people; further supports stakeholder pensions which provide a low cost, flexible option for moderate or higher earners who do not have access to a good occupational scheme; welcomes the Government's plans to ensure that pensioners with modest savings or a small occupational pension are rewarded for their thrift through the new pension credit; and supports the need for an effective system of financial regulation through the FSA and other measures to build public confidence.

BUSINESS OF THE HOUSE

Motion made, and Question proposed,
	That, in respect of the Anti-Terrorism, Crime and Security Bill, notices of amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—[Mr. McNulty.]

Hon. Members: Object.
	Debate to be resumed tomorrow.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Local Government Finance

That the Local Government Finance (England) Special Grant Report (No. 88) (HC 305) on Special Grant for Activities Undertaken by Beacon Councils, which was laid before this House on 25th October, be approved.—[Mr. McNulty.]
	Question agreed to.

Local Government Finance

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
	That the Local Government Finance (England) Special Grant Report (No. 81) (HC 276) on 2001–02 Special Grant for Gypsy Sites Refurbishment, which was laid before this House on 29th October, be approved.—[Mr. McNulty.]

Mr. Speaker: I think the Ayes have it.

Hon. Members: No.
	Division deferred till Wednesday 14 November, pursuant to Order [28 June 2001].

PETITIONS
	 — 
	Road Safety

Anne McIntosh: I have the honour to present a petition from Mrs. Jonete Coates, of Redmain cottage, Tollerton road, Huby, Yorkshire and 100 other residents of Huby or neighbouring villages, objecting to excessive speeds on country roads in and around Huby.
	The petition states:
	The Petitioner therefore requests that the House of Commons urges the Secretary of State for the Home Department and the Secretary of State for Transport, Local Government and the Regions to introduce measures which will ensure that the Tollerton Road is made safer for both users of the road and local residents.
	And the Petitioner remains, etc.
	To lie upon the Table

East Gloucestershire NHS Trust

Geoffrey Clifton-Brown: I have the honour to present a petition from 7,238 petitioners out of a total readership of 18,000 of the Wiltshire and Gloucestershire Standard.
	The petition reads as follows:
	To the House of Commons,
	The Petition of the readers of the Wilts and Gloucestershire Standard newspaper, Cirencester. Declares that the decision by the East Gloucestershire NHS Trust to take junior doctors away from Cirencester Hospital casts serious doubts over the future of health provision in Cirencester and the Cotswolds, especially with regard to the Accident and Emergency facility.
	The Petitioners therefore request that the House of Commons resolves that Her Majesty's Government instructs Gloucestershire Health Authority and the East Gloucestershire NHS Trust to maintain the present level of quality of NHS provision at Cirencester Hospital.
	And the Petitioners remain etc.
	To lie upon the Table.

DOMESTIC VIOLENCE

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McNulty.]

Margaret Moran: I congratulate the Department of Health on its guidance to health care professionals working on domestic violence. Its manual, which is a key resource for health care workers on domestic violence, is a model to be proud of. I welcome the fact that, over the past few years, it has been increasingly recognised by health professionals and the Department that health services play a critical role in providing access to help and protection for abused women and children and are a front-line point of contact for anyone experiencing domestic violence.
	Until recently, the health service has tended to disregard all but the immediate medical needs of people experiencing domestic violence. Any refuge relying on the support of GPs and health visitors will confirm that that has been a mixed experience, subject to the resources and understanding of the staff who work with it. Recent initiatives by the royal colleges and the crime reduction programme have undoubtedly improved responses to domestic violence, as has the welcome funding of a Women's Aid programme to raise awareness of the issue.
	However, much more remains to be done. Domestic violence is a key issue for the national health service, so why is it not referred to at all in the NHS plan? We need a more systematic approach across front-line health services to training; we also need to enable domestic violence survivors to access safely help that they may desperately need. In particular, we need clear measures to show how health trusts and, more importantly, primary care groups and trusts are implementing the guidance. A recent survey by Women's Aid shows that performance is patchy and the measurement of outcomes almost non-existent. General practitioners, dentists, health visitors, nursing maternity services, psychiatric and mental health care, general medicine, surgery and accident and emergency departments all need to be provided with training and confidence to identify and provide guidance.
	Survivors should not have to rely on enlightened health care professionals; they should be sure that help is available wherever and whenever it is needed. Domestic violence, particularly violence against women, is a problem in all countries, whether rich or poor. According to the British Medical Association, in this country it affects about one in four women, regardless of ethnic origin or status. The BMA found that about one in nine women using the health services have been hurt by someone they know or live with. The Department's own 1997 publication, "On the State of the Public Health", acknowledged that
	"the health and social costs and consequences of domestic violence are extensive and serious enough to constitute a major public health issue."
	Research has shown that health care services are often the first point of contact for women living with violent men. Women fleeing domestic violence are most likely to attend accident and emergency departments because of their 24-hour access and the anonymity that they provide.
	According to a 1996 study, domestic abuse is a common cause of significant injury, mental health difficulties and chronic health problems in women. It is estimated that 50 per cent. of women being treated for mental illness have a history of domestic violence. It has been well documented that psychiatric illness, particularly depression, anxiety and post-traumatic stress disorder, is greater in women who have experienced domestic violence. Many women do not talk about their abuse because of fear or shame. Often, a partner will not let a woman out of his sight, so a visit to a GP, often because of the illness of a child, may be her only way to communicate the problem. She may not know how to seek help, so an appointment at the doctor's or the hospital may be the only time when she is alone and able to talk.
	Violence and abuse are a public health scourge and their effects on health and well-being should never be underestimated. Many health professionals see patients whom they suspect of being abused at home, but may be unsure about to how to deal with the issue. That was the depressing finding of a recent Women's Aid report. Health care professionals have to engage with those embroiled in violent situations to deliver the appropriate care. Research has found that, in some cases, health professionals are seeing abused women as many as eight times before action on domestic violence is taken. It can be difficult for someone to acknowledge that the abuse that she is experiencing is domestic violence. That is not helped by professionals who do not recognise the seriousness of the matter.
	In the online consultation between parliamentarians and survivors of domestic violence, Womenspeak, one survivor stated:
	"None of the help I received whilst still married was of any use. I got told that as it wasn't happening every day, I should count myself lucky. I knew nothing about the help I could have received and no one told me. I also did not realise at this stage that the abuse I was receiving was domestic violence. It must have been obvious to the police, solicitor and staff of the hospital but no one said a word."
	Recognition of the abuse is often the first step to seeking help, so any agency responding to a domestic violence situation must, at the very least, offer the victim adequate support and supply relevant information about support available in the local area. The Womenspeak consultation found that that rarely happens in some areas.
	In another contribution from the consultation, a woman reported:
	"For six of those years I had no help from the police until I was admitted into hospital. While I was at the hospital I was given no advice on the help I could get, even though the nurse and doctor who treated me knew that I had been attacked by my partner. It was only when a police officer came to take a statement from me the following day that he gave me the number of the Domestic Violence Officer, who in turn gave me the number of a refuge for women. This was the first I knew that there was any help for myself and my son."
	Research in 1999 found that women experiencing domestic violence present frequently to health services and require wide-ranging health interventions, so a variety of health professionals have daily contact with patients whose health may be at risk or is already damaged by domestic violence, often over many occasions, yet only 6 per cent. of abused women were accurately identified in emergency departments.
	It is an appalling fact that violence against women is more likely during pregnancy and early parenthood. The extent and level of abuse was well illustrated by a midwife who recently confessed that she had little idea about the problem until a woman whom she had cared for and whose baby she had delivered just 48 hours before was readmitted for care because her husband had cut away her perinatal sutures in order to have intercourse.
	Pregnant women in violent circumstances look to midwives to help them confront the issues and receive support. It is a sad fact that maternal morbidity and pre-natal morbidity and mortality are significantly higher in women who live in violent and disadvantaged circumstances, and the numbers have been increasing. For the first time, domestic violence is included as one of the causes of death in the last maternity mortality report, "Why Women Die".
	The recently produced Department of Health midwifery action plan includes a clear steer for midwives towards developing their public health role. It acknowledges the need for midwives to be skilled in recognising the emotional, sexual or the often more evident physical abuse which take place against women, and to be able to act in the best interests of the woman and baby who are the primary focus of midwives' care. Sadly, that is not the norm throughout the national health service. I can cite an example from my constituency, where a GP told a woman who came to him after being set on fire by her husband to go home and not to annoy her husband again.
	That approach is reflected in a recent survey by Women's Aid, which found that only 27 per cent. of health authorities had a written practice or protocol for dealing with domestic violence. Fewer than a quarter collect information on the incidence and prevalence of domestic violence, and about half included the issue in their health improvement programme, which might simply mean the inclusion of a sentence on the subject and might not mean much action in practice.
	The survey reveals a similar or worse picture of practice among health trusts, yet health care professionals working in trusts are in an ideal position to encourage disclosure of abuse and to record it in order to highlight the scale of the problem and the need for relevant services. The report concludes that most trusts seem to ignore that.
	In areas such as mine, there has been a large increase in the reporting of domestic violence, with about 250 incidents reported a month. Increasingly, those reporting are women from ethnic minorities, but as is the case in many trusts, little or no information about domestic violence is available in ethnic languages. Like many primary care trusts, the focus of what training exists is on health visitors alone. In Luton primary care trust health visitors have, in the past, attended training sessions set up by Women's Refuge and have updated training. Like other primary care trusts, it relies on one identified health visitor with experience in domestic violence who is a resource for her colleagues. But what happens when she leaves?
	As for general practitioners, once again the picture is pretty desperate for those seeking help with domestic violence. General practitioners do not have formal training, either as junior doctors or as postgraduates. Locally, Luton primary care trust has encouraged GPs to be involved with training undertaken by health visitors, but it is not compulsory. Nationally, less than 9 per cent. of primary care trusts have a domestic violence policy and less than a quarter have a member of staff with some responsibility for domestic violence issues.
	It is clear from the survey that most senior staff in primary care trusts have given the matter relatively little or no thought. Where they have, they have cited difficulties of developing and implementing a policy throughout the various independent GP practices and other primary care services.
	Despite the increasing importance of primary care groups and trusts as the front line of resources and contact for survivors, the picture does not look good. Many respondents felt that the only way to effect change was for domestic violence to become one of the designated priority care groups and have their performance measured.
	As one health authority acknowledged:
	"Domestic violence is not properly recognised as a priority. It is very difficult to raise any form of interest except in a small minority of already committed and interested informed people."
	Another primary care group said:
	"Having read the questionnaire it is apparent that the vast majority of issues covered do not apply to the services we commission nor has the topic been identified as a priority for the primary care group."
	What hope, then, for the woman who seeks help from her GP? She may find little or no literature or training, and little or no network to point her towards support and assistance.
	Worryingly, there is still no systematic monitoring of the extent to which women experiencing domestic violence make use of the health service, nor of the outcomes when they do, and very few health authorities collect their own data on incidents or referrals.
	Responding to domestic violence is the responsibility of all agencies, not just the police or Women's Aid. The health service has a pivotal role to play in the identification, assessment and responses to domestic violence, not only because of the impact and cost of domestic violence to women's health, but because of the cost to the health service itself. For example, the financial cost of domestic violence for health agencies in Hackney in 1996 was estimated at £580,000, and that did not include hospitalisation and medicine.
	It is essential that health professionals are sensitive to signs and indicators that might suggest domestic violence. Women may find it hard to make the first step by disclosing domestic violence, but they may hope that the health professional will notice that something is wrong and put them in touch with support.
	What can the NHS do? I urge the Minister to take action on reinforcing the guidelines, particularly to primary care groups and trusts where their involvement is so vital. We need systems which monitor how or whether the guidelines are being used throughout the health service, but especially among front-line provision such as GPs and accident and emergency services.
	We need training on domestic violence issues to be included within the initial professional education of all health care staff and as a regular part of on-going training. For the national health service effectively to respond to the needs of those experiencing domestic violence it needs to ensure that it is raising awareness among staff of domestic violence and its effects; to instigate compulsory training; to create a safe environment which encourages disclosure by those experiencing domestic violence; to develop safe protocols for helping those in this situation; to develop good referral systems as part of a multi-agency response; to ensure that women health professionals are available where necessary; to seek to empower those experiencing domestic violence to make their own informed decisions; to provide options and information; and to respect confidentiality. It needs to display information and to work with refuges, helplines and outreach and advocacy services for women and children, and also to develop referral and support networks recognising the role and skills of other agencies.
	It is clear that, unless responses to domestic violence are included among the criteria against which the performance of health care providers is measured, many will continue to ignore the issue. The health service may be a lifeline for women whose contact with the outside world is restricted by a violent partner. For them, access to front-line health services that recognise and respond to their needs may be a matter of life and death.

Hazel Blears: I am delighted to congratulate my hon. Friend the Member for Luton, South (Margaret Moran) on securing this very important debate. I am aware of her tremendous record of raising these issues in the House in relation to almost every single Department. By her personal endeavours, she has raised the matter way up the agenda. I am also personally aware of the online consultation that she was responsible for organising, which gave women the opportunity to respond through the internet and to tell their own stories about their experience of domestic violence. There is nothing more moving than to read and understand the real experiences of women in the community and the impact of domestic violence not on only them, but on their families. I commend that consultation to all hon. Members who have not had the opportunity to hear and understand the views that have been expressed, which are extremely powerful and have been a great aid to us all in understanding the complexity of some of the issues that are involved.
	The facts about domestic violence are shocking to all of us. About one in four women will experience domestic violence at some time in their lives. Although we have heard predominantly about women in this debate, there is a clear recognition that domestic violence sometimes involves men as its victims, and we must not forget that. More than 1 million incidents of domestic violence are recorded by the police every year. One in four of all assaults involve such violence. Two in every five women who are murdered are killed by a partner or ex-partner. Certainly, domestic violence is very rarely a one-off episode. More often, the experience is one of repeated and intensifying assault. On average, a woman experiences 35 incidents of domestic violence before seeking help. That is the extent of the problem.
	About a third of domestic violence starts in pregnancy. Often, when there is domestic violence in a family, it escalates during pregnancy, when women are at their most vulnerable. Women with unwanted pregnancies often carry the greatest risk. Domestic violence is clearly associated with miscarriages, premature birth and labour, low birth weight, and foetal injury and death.
	Almost all women will have contact with the health service by being registered with a GP. I agree entirely with my hon. Friend that the health service is ideally placed to pick up and monitor cases and, it is to be hoped, to take action in this very important area. A recent study showed that approximately 80 per cent. of women in a violent relationship had sought help from the health service on at least one occasion.
	The issue is one for the Government as a whole and not just the NHS. The policy document "Living Without Fear", published in 1999, set out the Government's initiatives across all Departments, as well as good practice and our commitment to tackling domestic violence and other forms of violence against women. It is important that we consider not only the women who are involved, but the children, who can suffer if they live in households where there is regular domestic violence. It has been shown that such violence can have a serious impact on children's development and well-being.
	The health service has a particular role to play in trying to counter domestic violence. Health professionals are most likely, out of those in all agencies, to come into contact with its victims. They are also the most likely people to be perceived as non-judgmental, which is a very important issue for women in these circumstances. Many women simply want the abuse to end, but they may be concerned that their children will be taken away from them once the agencies start to intervene. There is a genuine fear that, once social services become involved, the consequences can sometimes be dire for the whole family. Women's trust in health professionals whom they do not see as threatening or judgmental can therefore be vital in giving them the self-confidence to disclose what has been going on.
	Health professionals have a key role to play in helping women to tell them what is happening in their homes, in providing support and practical advice about the available options, which is what many women are looking for, and in demonstrating a continuing understanding and a source of help or referral. Whatever decision the woman initially makes, the health service professional will be there to support her, to help her through the system and to help her to take advantage of the choices on offer.
	My hon. Friend referred to the NHS resource manual for health professionals that was developed in March last year. I am grateful that she thinks that it is a valuable resource. The manual builds on and consolidates guidelines that have been issued by the various royal colleges. It provides greater clarity to stimulate the debate and to inform the development of good practice throughout the health service. It is aimed primarily at health care professionals, to try to increase their knowledge and understanding of the issues, to highlight the nature of domestic violence that takes place in a range of settings, and to show how it is likely to be evident among the patients for whom they care. They will then be able to see the warning signs and the symptoms, and be ready to intervene and to take action.
	The manual is to be used as a resource that provides a starting point for health authorities and trusts to review their own policies and practices. I accept that it needs to be supplemented with information and data that will support local implementation, because the manual will only be good when it is keyed into what is happening in local communities and used as a source of practical help on the ground, providing real information to assist people.
	It is essential that front-line workers be supported by their managers in implementing and developing the protocols to tackle domestic violence. There needs to be better monitoring and much more extensive information gathering, so that we can be aware of the full extent of the problem. My hon. Friend is right to say that if we can measure progress, things tend to get done. Unless we do so, this issue could slip down the agenda, which is certainly not what we want.
	The resource manual has been widely taken up, right across the health service. The first print run of 10,000 copies has already gone, and the second print run is going well. We are trying to push it out into every part of the NHS.
	We are also moving on from there. We are funding the Women's Aid Federation of England in a three-year project to raise awareness of domestic violence in the health service. The federation carried out an initial survey, the findings of which were published last year, as my hon. Friend mentioned. She is right to say that not enough health authorities or trusts have their own written policies, or an accurate way of monitoring the extent of the problem in their communities. We at the centre need to ensure that, as the primary care trusts begin to develop their commissioning policies, they take this matter seriously. The federation's survey has been tremendously useful in showing us what action is being taken on the ground, where the gaps are, and where we need to do even more.
	The Women's Aid Federation will undertake a second survey next year to gauge how successful the manual and its awareness project have been. We intend to measure and monitor these processes and to ensure that they happen. The federation has also published a practice directory, a very useful document giving examples of new health care initiatives in tackling domestic violence. One of the challenges for the NHS is to try to spread good practice. There are pockets of excellence everywhere in this country, and it is sometimes frustrating that we try to reinvent the wheel rather than learn from each other and spread the good ideas across the country. The directory of good practice will be a useful tool for the whole NHS to use.
	We have also considered domestic violence in relation to NHS Direct. If women telephone the service, they can get immediate advice, signposting and referral to appropriate support services in their community. The telephone number of NHS Direct is becoming much more widely known, and the service has now been rolled out nationally. In the east midlands, NHS Direct has been piloting a domestic violence protocol for use with callers to the service. It will report on the pilot, and if it is successful it will be rolled out to other areas of the country.
	Although tackling domestic violence is important to the NHS, it is also important for us to respond to these problems on a cross-government, multi-agency basis. The Home Office has been active in supporting a whole range of initiatives under the crime reduction process. I want to highlight two examples in which the health service, eduction services and local authorities have been able to do really practical work in tackling these issues. The first is in north Devon and Torridge, which is a rural area. Often, support services for women suffering from domestic violence are particularly difficult to access in such areas, because they are concentrated in urban communities. The project provides services in the local accident and emergency department, which is where many women immediately go when they experience domestic violence.
	It is hoped that the project will expand in its second phase to encompass every health centre and doctor's surgery in the district and two small local hospitals. It aims to provide advice from Women's Aid and legal advice from solicitors and to ensure that 24-hour victim support is available on the spot to help women—and, indeed, men if they are victims of domestic violence—through the health service. We can all learn from the project, and we should evaluate it to judge how successful it is. We must ensure that there is support in the community to help people in that situation, whatever the time of day or night. The project is extremely interesting.
	The other example I want to highlight is supported by the health action zone project in Leeds. It is entirely different, but just as valuable. Three local schools and a mixed-sex group of boys and girls aged eight and nine are involved. The aim is to ensure that they are aware of the problems of domestic violence from a very early age, to extend awareness and to ensure that domestic violence is on their agenda.
	I hope that, when we raise the next generation, we will not duplicate the problems that exist in so many families. Again, a multi-agency approach is involved—raising awareness and ensuring that we can support those young people if they happen to be in families where domestic violence unfortunately occurs, as well as giving them the self-confidence and self-esteem to tackle it themselves.
	Those are two of about 22 projects being funded this year. There were 200 bids for support from a £10.7 million programme, which is making a tremendous impact on tackling domestic violence in communities. There is a great deal going on, but I would not claim to my hon. Friend the Member for Luton, South that we do not have a lot more to do on the issue. It is widespread and it infiltrates so many families in our community.
	All Members of the House want to ensure that we send a clear message that there is never any excuse for domestic violence. It is a crime like any other. It turns people's lives into tragedies for themselves, their children and the rest of us. The Government have to put practical support in place so that we give people choices. Domestic violence is dreadful, because it traps many women and victims generally in a situation in which they feel there is no hope and nobody there to help. There is nobody they can turn to, and they are isolated and alone.
	We must ensure that we put in place in our community support networks that give people the chance to live the kind of life that almost all of us take for granted. We are making progress, but we have a long way to go. I am delighted that my hon. Friend has again raised the issue in the House and ensured that we all have it at the forefront of our minds when we develop policy in this extremely important area. I congratulate her again on raising it in the debate.
	Question put and agreed to.
	Adjourned accordingly at three minutes past Eleven o'clock.